Buy-to-Let Mortgage Products

Expert Guides

The costs for buy-to-let mortgages depend on your mortgage product, your loan-to-value (LTV) ratio and the term of your buy-to-let mortgage deal; the lower your LTV and the shorter duration of your product, the cheaper your buy-to-let mortgage will cost. You should also bear in mind that, as a landlord, you can no longer claim all of your mortgage interest against Income Tax on rent.

Most buy-to-let mortgage lenders will want your rental income to be at least 125%, and sometimes as high as 145%, of your monthly mortgage repayment or mortgage interest. Lenders will then use a managed rate as opposed to your actual mortgage product rate to work out your monthly buy-to-let mortgage repayment. Remember, in addition to your rental yield, you’ll also need to meet the lender’s criteria for income, age and credit score.

Here’s an example of your rental yield:

  • Property value: £300,000
  • Monthly rental income: £1200
  • Expected rental yield: 80%

 Interest rates for buy-to-let mortgages vary according to the type of product you choose, which include fixed-rate, standard variable rate (SVR), tracker and discounted variable rate. Your monthly interest payment will depend on the size of your loan, your property’s rental yield and your financial circumstances, including your credit score. You’ll also need to pay charges to your buy-to-let mortgage provider.

There are advantages and disadvantages of all buy-to-let mortgage products so you should get professional advice from an expert, independent buy-to-let mortgage broker who will have access to all ranges of products currently available on the market.

To find out more about buy-to-let mortgages, call our expert team of mortgage advisers and we’ll help you find the right product to suit you, your property and your pocket. Call us on 08454 500200 or click here for more information.

If you’re thinking of taking out a buy-to-let mortgage, you’ll need to satisfy the following criteria:

  • You own your own home – either mortgaged or owned outright.
  • You want to invest in houses or flats that you’ll rent out to tenants.
  • You have a good credit score and don’t have too many other borrowings that could make it hard for you to maintain your buy-to-let mortgage repayments if the property is unoccupied.
  • Lenders have varying upper age limits, which will refer to the oldest you can be when you take out a buy-to-let mortgage.
  • You understand the risks associated with investing in property. You’ll know that rates can go up as well as down and a mortgage is secured on your property – if you don’t maintain your mortgage repayments, you home could be repossessed.

If a buy-to-let mortgage sounds like the right type of mortgage for your next property purchase, your first step should be to talk to an independent mortgage adviser who has access to the best buy-to-let mortgage deals on the market. Your mortgage adviser will also be able to tell you if you qualify for a buy-to-let product.

Talk to our team of expert mortgage advisers today to find out more about buy-to-let mortgages. Call us on 08454 500200 or click here to make an enquiry.

If you’re already a landlord or are looking to buy a property to rent out, you should be considering a buy-to-let mortgage. A wide range of fixed-rate, standard variable rate (SVR), tracker and discounted buy-to-let mortgages are available and, although they’re similar to ordinary residential mortgages with the same laws, there are some differences that you need to be aware of.

Costs are higher

Fees for buy-to-let mortgages can be higher than traditional mortgages and interest rates will also be higher on a buy-to-let mortgage.

You’ll need a bigger deposit

 Because buy-to-let mortgages are considered a higher risk than residential mortgages, the minimum deposit you’ll need for a buy-to-let mortgage can be higher. You’ll usually need a minimum deposit of 25% of the property’s value, although this can vary between 20% and 40% depending on your mortgage lender and buy-to-let mortgage product.

Interest-only repayments

Repayments for the majority of buy-to-let mortgages are interest-only, which means you won’t be reducing the capital sum that you borrowed. At the end of the buy-to-let mortgage term, you’ll repay what you originally borrowed in full. Talk to your mortgage adviser if you’re specifically looking for a repayment buy-to-let mortgage.

Unregulated lending

The majority of buy-to-let mortgage funding isn’t regulated by the Financial Conduct Authority (FCA).  Your mortgage adviser can give you guidance on consumer buy-to-let mortgages if you want to let your property to a family member.

Your lender will usually require the rental income on your property to be up to 30% higher than your buy-to-let mortgage repayment so do your homework by researching rental values in your area. Remember that you’ll still need to make your mortgage repayments when your property is unoccupied and that, if house prices fall, you may fall into the negative equity trap and will have to make up the shortfall if you decide to sell.

You’ll also be required to pay Capital Gains Tax (CGT) on your buy-to-let property when you sell and Income Tax on any profit that you make on your rental income. Depending on your income tax band, you could be taxed at 20%, 40% or 45%. Talk to your accountant about CGT, Income Tax and Mortgage Interest Tax Relief, which is changing.

As you can see, there’s more to buy-to-let mortgages than you might think. It’s always best to talk to an experienced, independent mortgage adviser to find out if you’re eligible for a buy-to-let mortgage and to see which buy-to-let product is most suitable for you. Call our expert team on 08454 500200 or click here to find out more.

If you’re thinking of taking out a buy-to-let mortgage product, we’ve put together our top tips that will help you make the right decision when it comes to buying an investment property.

Buy-to-let top tips:

Do your homework

A buy-to-let mortgage is a great way for landlords to secure a rental property investment, but you need to be sure it’s the best use of your money. Do your research and compare how your money might perform if you invested it elsewhere. Remember that a buy-to-let investment will mean tying up your capital in a property that might fall value.

Location, location, location

 Just because a property is in a good location, it doesn’t follow that it’s the best place for your buy-to-let investment. You’re looking for an area that people will want to live in for all sorts of reasons. Students, young families and commuters all have different needs so if you can match their requirements with a property that you can afford, you’ll have a better chance of finding a tenant that will make your investment work harder for you.

Do your sums

Research the properties on sale in the area you’ve decided on and explore the rent that you’re likely to achieve each month. Factor in insurance premiums and maintenance cost and remember that if your property is empty for any reason, you’ll still need to make your buy-to-let mortgage repayments.

Landlord obligations

You’ll need to decide whether you’re going to be a hands-on landlord or will appoint a property management agent to carry out work if problems arise. If you opt to manage the rental property yourself, be prepared to deal with problems that arise promptly – and that could mean weekends and evenings too. An agent will charge you a management fee, regardless of whether the property is occupied or empty, but they should have a good network of trades to jump into action if something goes wrong at your property.

Talk to a specialist buy-to-let mortgage adviser

 Buy-to-let mortgages can be complex and a more expensive option than a traditional residential mortgage so it’s vital that you get the best advice you can from buy-to-let mortgage specialists.

If you’re considering a buy-to-let mortgage for a property investment, talk to our team of expert mortgage advisers first to discover the most suitable mortgage products for your purchase. Call us on 08454 500200 or click here to make an enquiry.

Wanted to get a re-mortgage to, hopefully, reduce monthly payments. Spoke to Rob who went through my options and explained everything clearly, very helpful and knows what he's doing. Once things were in place, I went with Rob's recommendation, I was then in contact with Cara to go through the paperwork side of things. Cara is always there at the end of the phone or e-mail and very quick to help. Due to the current lockdown things have slowed down, my end not being able to get things signed, and Cara has been in touch ensuring that when things ease up we'll be ready to go. An excellent team, very helpful and knowledgeable. Highly recommended.

Darryl W

May 2020

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