Buy to Let Mortgages

Buy to let mortgages are designed for people who wish to purchase a property to rent out to others. The ability to repay this type of mortgage is often based on the projected rental income from the property.

There are several differences between buy to let mortgages and conventional residential mortgages:

1. The decision of whether your mortgage is accepted from an affordability point of view is mainly based on the rental income the property can generate. In these circumstances, personal income is not normally considered, however recently lenders are requesting to know what your personal income is to ensure that if at any point the property is not rented, the mortgage payment can be sustained.

2. A Buy to let mortgage may have a slightly higher rate and fee than a standard residential mortgage. In recent times this gap has reduced massively.

3. Changes in recent taxation laws on Buy to Let mortgages now means landlords are restricted in what they can offset as tax relief against their rental income. It is imperative to speak to a qualified accountant/tax specialist to discuss your options.

3. Buy to let mortgages may require a larger deposit – typically a minimum of 20% or 25% of the property’s value is required as a deposit.

When becoming a private landlord your primary objectives are income and capital growth. In other words, you are looking to a) make a profit from your rental income every month and b) also hope for property prices to rise. The location, condition and demand is crucial in your decision when purchasing a property.

We strongly recommend you speak and discuss your requirements with one of our Buy to let specialists for advice and guidance.

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