Buy to Let Mortgages - Buying to Let - Buy to Let Remortgages

Buy-to-let mortgages

Buy-to-Let has become both a fashionable and profitable investment with borrowers rushing to the latest low price buy-to-let mortgages. Some are adding property to their existing portfolio; others are simply trying to create a source of income to act as a pension when the mortgage is paid off. Whatever your reasons for becoming a landlord, most people will use a mortgage to finance part of the new property.

There are now many specialist products available including fixed rates, discount rates, capped rates, base rate trackers and flexible mortgages.

These mortgages assume that rental income will be used to service the loan, thus allowing the borrower to access finance even though their existing income would not be sufficient. Before you make your investment it is always advisable to do some research. You need to know the area and expected rental income. You should consider things such as local transport, shops, and schools whilst also considering the type of tenants you want.

Unlike normal residential mortgages, you cannot borrow 100% of the property value for buy-to-let. The amount of deposit you need will depend on the particular mortgage you select. This may be as little as 10%, however you may choose to put down a larger deposit to get a better rate from the lender.

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What is a buy-to-let mortgage?

A buy-to-let mortgage is a loan you take out to buy a property which you intend to rent to tenants. The mortgage might be a second charge on your own home or, more usually, it is secured against the property to be let.

It is a long-term investment which you hope will generate an income from rents and a capital gain when you sell the property. But there is no guarantee that you'll make a profit on your investment.

How much can you borrow?

The maximum you can borrow is usually linked to the amount of rental income you might expect to receive.

For example, a lender might require the projected rental income to be 15-30% higher than your mortgage payment. Typically, you'll need to pay a deposit of around 10-20% of the value of the property.

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Think carefully before securing other debts against your home. Your property may be repossessed if you do not keep up your repayments on your mortgage or any other debt secured on it .

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