Buy to Let Explained
When you want to take out a mortgage, Buy to Let mortgages are different to ordinary residential mortgages because the amount you borrow does not always depend on how much you earn, although if you earn less than £25,000, you may find less buy to let mortgage options. The interest rates, arrangement fees and deposit may be higher with a Buy to Let mortgage than if you were taking out a residential mortgage.
Taking out a Buy to Let mortgage
You can often take out an interest only mortgage if its Buy to Let, something that’s much harder with a residential mortgage. As not all banks and building societies offer buy to let mortgages, there may not be as much choice.
When working out how much you could borrow, a mortgage lender will take several factors into account such as how much rent you could charge; the rent should be at least a quarter higher than your monthly mortgage payments and how big a deposit you have; the minimum deposit is generally 15 to 25% of property value. They also want to see that you can pay the mortgage if the house is empty for a period of time and that you can afford the payments if the interest rate was to rise. There are different types of Buy to Let mortgages such as fixed rate, tracker rate and standard variable rate.
It’s a good idea to talk to a mortgage broker before you take out a Buy to Let mortgage as they’ll know the best deals in the market and help find the right one for you.