Buy-to-let mortgages are a powerful tool for both seasoned investors and also new landlords who are looking to take their first steps onto the rental property market.
You can get a buy-to-let mortgage if you:
- Want to invest in houses or flats
- You earn over £25,000+ a year for most lenders however we have a few lenders where no income is required.
- You are within a certain age bracket. As lenders usually have an upper age limit which is around 75 years old, it is important to note when the mortgage will end and how old you will be. We also have access to a few lenders with no upper age limit.
- You have a good credit record. This will allow you to look more enticing to lenders and help with the deposit amount on your buy-to-let mortgage.
You will need to be able to afford to take and understand the risks of investing in property, including financial provision for any periods without a tenant or any maintenance issues within the rented home.
Lender borrowing amounts differ on a case by case basis. All cases are dependent on your deposit, personal circumstances and rental income. Usually, you are required to earn more in rent every month than you repay on your mortgage. Exactly how much more would depend on whether you are purchasing in your own name or via a limited company, whether you are a basic or higher rate tax payer and how many properties you currently own.
Although usually landlords prefer to invest in cheaper properties than homeowners, buy-to-let mortgages cost more. This is due to the fact that borrowers are more of a risk to lenders than owners.
A larger deposit is needed on a buy-to-let mortgage rather than a residential mortgage, in order to protect the lender in the event of default payments. Therefore deposits for a buy-to-let mortgage are usually at least a minimum of 15% and usually 20 to 25% of the property value.
There are fees that need to be paid on buy-to-let property that will need to be factored into the overall budget. This is crucial when understanding whether or not you are able to afford a buy-to-let mortgage.
These include the following fees:
- Tax on rental income
- Building and landlord’s insurance
- Maintenance and repairs for the property
- Stamp Duty Surcharge