What Is A Buy To Let Mortgage?
Buy to let mortgages, also known as BTL mortgages are a type of mortgage that allows you to borrow against a house which is, or will be let out.
There are different types of buy to let mortgage, including those for limited companies, HMO mortgages, student lets and holiday homes.
Generally speaking, traditional buy to let mortgage lenders will require the property to be let using an assured shorthold tenancy (AST) agreement.
Are BTL Mortgages Different From Residential Mortgages?
Yes, buy to let mortgage products are distinct and different from residential mortgage products.
Residential mortgages cannot be used for buy to let properties and vice versa.
The criteria used to assess each type of application tend to be very different, with residential mortgage lenders focussing on the earned income of the applicant.
Buy to let lenders may have a minimum earned income for applicants but will generally be more concerned by the proposed rental income.
What Is The Best Buy To Let Mortgage?
There is generally no single ‘best product’. The focus should be on finding the best product for your own circumstances. The key things to consider will be the following:
- The loan to value that you’re looking for
- The lender’s affordability assessment criteria
- Your preferred interest rate type (fixed, variable, tracker, discounted etc)
- The length of any promotional rate (e.g. 3 year fixed rate vs 5 year fixed rates)
- Any fees associated with the product
- The relative ease or difficulty of the lender’s application process
Of course, there may be more info that is taken into account, depending on your personal circumstances.
Will The Lender Want To Check My Income?
Most buy to let mortgage lenders will ask you to prove your income, although the criteria of each lender will differ. Some lenders may have a set minimum income for applicants, whereas others don’t.
Where you are in receipt of rental income from existing buy to let properties, you will usually be expected to prove this income. Proof of rental income is usually sought through sight of your tax returns.
Where you have only been in receipt of this income since your latest tax return was submitted, bank statements showing the rental income will usually be acceptable.
Will I Meet The Criteria For Buy To Let Mortgages?
As an independent broker, we work with lenders across the market. As such, we don’t have strict criteria that we work to and can arrange funding for most circumstances.
We work with lenders who are happy to accept adverse credit, have no minimum income requirements and even some that will allow you to top up your rental income with earned income.
We never charge upfront fees, so you can discuss your circumstances with an experienced expert at no cost to yourself.
Can I Get A Buy To Let Mortgage Without Putting Down A Deposit?
No, buy-to-let mortgage lenders will usually require a deposit of at least 15%, although 20% is far more common.
When purchasing a property below market value, you may be able to purchase without a deposit using a bridging loan. Once purchased, assuming the criteria can be met, you can then refinance to a traditional BTL mortgage.
Should I Get A Repayment Or Interest-Only Buy-To-Let Mortgage?
The answer to this question will depend on your circumstances and your aims for the property.
Capital repayment mortgages have the benefit of the loan being fully repaid at the end of the term. The downside to this is that the monthly costs will be higher, something that may reduce your maximum loan.
Interest-only mortgages allow you to pay only the interest due each month, with no money being paid off the loan. As a result, your mortgage repayments are lower, but due consideration should be given to how the loan will be repaid at the end of the term.
Can You Offer BTL Mortgages For First-Time Buyers?
Yes, we can offer funding to first-time buyers who are looking to purchase an investment property.