What is a Buy to-let mortgage?
A buy to let property is one which is bought for the sole purpose of making an investment return this is done via renting it out to tenants and property appreciation.
If you want a buy to let mortgage then a buy to let mortgage broker may be able to advice you on sutiable buy to let mortgages.
You will need a buy to let mortgage for any property you do not plan to live in.
Buy to let mortgages are assessed in a different manner and the deciding factor is more on the home. If the home is likely to make an income surpassing the cost of maintaining the mortgage then a Mortgage will likely be given.
Some buy to let mortgage Lenders now look into the investor’s personal accounts and new regulation will place more impetus on this.
Buy to let mortgage lenders will typically want the expected rental income to cover at least 125% of the Monthly Mortgage repayments.
Buy to let mortgage lenders usually require a higher mortgage deposit for buy to let loans and the best deals are usually obtained with a 40%+ mortgage deposit.
Buy to let Mortgage fees?
Interestingly most buy to let mortgages with the lowest interest rates seem to have the highest upfront fees as a way for the lender to offset the loss in mortgage interest earnings.
Typical Buy to let mortgage fees could be anywhere between 0.5% and 5% of the buy to let Mortgage.
You can spread this payment as part of your buy to let mortgage but this may cost you more. It is always better to consider the APRC rather than APR as this gives you a full overview of the cost of the mortgage.
How tenants affect your buy to let Mortgage chances?
The type of tenant you plan to rent to might really affect your buy to let mortgage chances. For instance, many buy to let mortgage lenders have restrictions on mortgages for student lets and Houses in Multiple Occupation (HMOs). An HMO building is defined by having three tenants or more, that form more than one household and who share a toilet, bathroom or kitchen facilities.
You will need buy-to-let insurance!
Most buy to let mortgage lenders will insist you have a landlords buy to let insurance which covers building and contents as well as landlord liability before they will approve your Buy to let Mortgage.
It is essential you carry out a valuation report and insure your property for the right value so you are not underinsured as this will mean losing out in the event of a claim.
Buy-to-let tax implications?
Buy to Let tax implications are subject to change and are not the focus of this guide. Buy to let mortgages may have income tax implications and youshould seek independnt tax advice.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.