Looking to buy a house to rent out?
Looking to increase your property portfolio?
Getting a Buy to Let mortgage is a great way to become a landlord and build your property portfolio. Renting out properties can be a big income booster.
Although it can come with great profits, it is a financial commitment that needs consideration. It’s seen as a bigger risk than a normal mortgage, so there are different rules and criteria for acceptance.
Our experienced team at The Mortgage Way can review your situation and advise you free of charge*. We get to know you and help you to confidently plan for your future.
Do I qualify for one?
Buy to Let mortgages have certain criteria you need to hit to be considered by banks. The specifics differ between lenders, and they are changing all the time. We are always up to speed and will have all the up-to-date information, for when you get in touch.
You should aim to be charging the tenants rent at 125% of your mortgage monthly payments. This helps to reduce potential risks and lets the banks know the costs are covered.
If you’re unsure about whether you can get a Buy to Let mortgage, speak to The Mortgage Way team for free advice.
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How do Buy to Let mortgages work?
Although very similar to normal mortgages, Buy to Let agreements have some key differences.
The biggest important factor to know is Buy to Let mortgages can be interest only. This means your monthly repayments only pay off the interest. Your full mortgage amount (known as capital) is only settled at the end of the agreed term.
Fees and interest rates can be much higher than traditional mortgages. Your total loan value is usually up to 75% of the property value, meaning you need a much higher deposit.
How much can I borrow?
As the predicted rental income for the property must be at least 125% of your monthly Buy to Let repayments, how much you can borrow is affected by local rental prices.
If your property is a three-bedroom in a certain area, there will be a ceiling price to how much rent you can charge tenants. Your lender will take this into account alongside your deposit amount when looking at how much you can borrow.
As this can be difficult to gauge, it’s worth booking an appointment with our team. We will review your circumstances and offer our advice, free of charge.
What else do I need to consider?
As with all financial commitments and loans, you need to be prepared for potential risks. What will you do when your tenants leave, and you have a period with no rental income? You need to plan for these inevitable months by having enough money in savings to still pay for bills.
You should also have a savings account to cover any house repairs or updates needed. Although you will need to take out buildings insurance, you will be responsible to pay for essential upkeep.
It’s worth building in a buffer into your financial planning in case house prices fall. Don’t count on selling the property to repay the Buy to Let mortgage.
Why choose The Mortgage Way for
a Buy to Let mortgage?
Navigating a Buy to Let mortgage can feel complicated for people who are not yet landlords. With the different tax implications and borrowing rules, you need to be fully prepared for the financial commitment before applying.
The Mortgage Way team can review everything for you, free of charge*. After your appointment, you will have the knowledge for you to plan with confidence.
Book your free appointment with our team to discuss arranging your Buy to Let mortgage. Either call us on 01422 659067 or complete the form below and we’ll call you back.
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