January 22, 2022
Buy to let mortgages differ from regular mortgages and there are certain requirements from lenders that you need to satisfy before you can gain access to funding.
- you want to invest in houses or flats
- you can afford to take and understand the risks of investing in property
- you already own your own home, whether outright or with an outstanding mortgage
- you have a good credit record and aren’t stretched too much on your other borrowings, for example, credit cards
- you earn £25,000+ a year - if you earn less than this you might struggle to get a lender to approve your buy-to-let mortgage
- you’re under a certain age - lenders have upper age limits, typically between 70 or 75. This is the oldest you can be when the mortgage ends not when it starts. For example, if you’re 45 when you take out a 25-year mortgage it will finish when you’re 70.
How do buy-to-let mortgages work?
- The fees tend to be much higher.
- Interest rates on buy-to-let mortgages are usually higher.
- The minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value (although it can vary between 20-40%).
- Most BTL mortgages are interest-only. This means you pay the interest each month, but not the capital amount. At the end of the mortgage term, you repay the original loan in full. BTL mortgages are also available on a repayment basis.
- Most BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA). There are exceptions, for example, if you wish to let the property to a close family member (e.g. spouse, civil partner, child, grandparent, parent or sibling). These are often referred to as a consumer buy-to-let mortgages and are assessed according to the same strict affordability rules as a residential mortgage.
Want to discuss your Buy to Let options? Get in touch with us today.
