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What is a Buy to Let mortgage?

Buy to Let (BTL) mortgages are for properties that you intend to let out to tenants. As the property is not for your personal use, the FCA does not regulate this type of mortgage unless you plan to let the property to a relative. The rules and criteria surrounding BTL mortgages are therefore very different to residential mortgages.

Whereas residential mortgages are assessed based on your ability to afford the mortgage payments, with BTL mortgages the maximum loan will be determined by the property’s rent generating capability. Put simply, the more rent the property can generate, the more you will be able to borrow.

It isn’t quite as simple as that however as each lender has their own unique set of rules and a different calculation that they use to work out how much you can borrow. Some have minimum income requirements for the applicants, some don’t. There are different rules depending on which tax bracket you are in and your prior experience as a landlord can affect the deals available.

Fortunately we have years of experience dealing with this type of mortgage and ensure that we keep informed of all the current rules and requirements. We will make sure you get the best possible deal that is on the market at any time so please get in touch to see what’s currently available.

Why take out a BTL mortgage?

There are many reasons why you may want a BTL mortgage, these are some of the more common ones:

1. You are an “accidental landlord” – someone who didn’t originally intend to let their property but has ended up doing so because of circumstances that have arisen. For instance, you may want to move house but are finding it difficult to sell your old property. One option is to remortgage it as a BTL instead to raise the deposit for your new property and then let out your old property.
2. Rental returns can potentially be much higher than the interest you can earn on your savings, supplementing your income each month. It is usually an option to have BTL mortgages on an interest-only basis to maximise the amount of the rent left over after paying the mortgage payment each month.
3. You wish to replace or top-up your pension plan with rental income. If you set the mortgage up on a repayment basis, you will potentially be able to pay off the mortgage by the time you retire, meaning you will then be able to keep the entire rental payment each month. Plus you will be able to sell the property and release a lump sum should you wish.

BTL mortgages can be used to purchase a property or to remortgage an existing let property. BTL remortgages can generally be used for all the same purposes as residential remortgages – Renewing your Deal, Capital Raising or Debt Consolidation (See the Remortgages page for more detail on each of these.)

Most BTL lenders do not deal directly with the public and only offer their mortgages through brokers due to complexity of this type of mortgage. We deal with all the major lenders on the market so if you are thinking of purchasing or remortgaging a Buy to Let property please give us a call today to arrange your free consultation, or use the form to request a call-back.

Click here for free Buy to Let Mortgage Advice