28th March 2020
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.
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