Buying To Let Mortgages
Loan to value
Buy to let mortgages are usually available up to 75% loan to value, but some lenders offer 80%. As with any mortgage, the higher the loan to value, the higher the interest rate, or the lenders charges.
Who is eligible?
If you have owned your own home for a certain amount of time and have sufficient separate income, buy to let mortgages are available from a wide range of lenders.
Their deals and their criteria can vary substantially, including their arrangement fees etc. First time landlords are not acceptable to many lenders, but some will lend if at least one borrower already owns their own home and can meet the lenders other criteria.
Lenders requirements vary in terms of how much rental income is needed, but in general their “stress test” now uses quite a high interest rate, and is often based on 145% of the interest only mortgage payment.
This can make it harder to place some cases than it used to be.
Lenders need to be satisfied you could afford the mortgage repayments in periods when the property may not be letted out, therefore most have a minimum income requirement from employment / self-employment.
This varies from lender to lender, but covers the type of property, the number of BTL properties, the number in one area, the number with that particular lender, and your financial circumstances and credit history.
Advantages and drawbacks
Extra rental income and growth in property value are clearly advantagous. Drawbacks include tax considerations, bad tenants, periods the property is empty, repair costs, initial stamp duty land tax on purchase, and potential losses if property values fall.
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As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.
Think carefully before securing other debts against your home. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
For mortgages there will be a fee of usually £100, and we will also receive a payment from the lender.
For Commercial Loans we act as introducers only. The FCA does not regulate Commercial Loans.
The FCA does not regulate loans and some forms of Buy to let mortgages