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Buy-to-Let mortgages

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A buy-to-let mortgage, also known as an investment mortgage, is designed for borrowers who would like to buy a property to let out to a third party (e.g. tenants). It is normally an interest only mortgage.

Buy to let mortgages can be financed from monthly rental income rather than the owner's earnings. The lender has to be satisfied that the potential rent can cover the monthly mortgage payments. The lender may ask for rent cover of up to 130% of the monthly payments.

Buy to Let mortgage deals depend on a number of key factors:

  • The amount of mortgage you require will depend on the rental income of your property. In the current financial climate whilst interest rates are low, it is now slightly easier to meet this mortgage requirement.
  • The lower the LTV (loan to value) the better the deal you will get in terms of interest rate. The normal advance on a buy to let mortgage is usually 60% to 85%.
  • With a buy to let mortgage, always consider the overall package and not necessarily the initial pay rate, because the terms and conditions and fees are critical as to whether a proposal is suitable.
  • Rental cover required by lenders can be as low as 100% of rent based on a fixed rate product. The normal rental cover can be anything from 100% to 125% of the pay rate.

Complex or difficult to place buy to lets? Click here

Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority.

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