As more and more young people are finding it a struggle to obtain a mortgage to purchase their first property they are having to turn to rented accommodation instead. As a result a growing number of landlords are investing in property that they can rent out using a Buy to Let mortgage to part fund the purchase.
Buy to let mortgages are similar to residential loans but are designed for landlords who buy property specifically to rent out.
There are some differences between residential mortgages and buy to let mortgages
- Interest rates on buy to let mortgage rates tend to be a little more expensive than residential loans
- You will be required to put down a bigger deposit ususally in the region of 25%.
- You will need to supply evidence that the rental income generated will more than cover the monthly mortgage payments. Affordability is typically linked to rental income calculations, which vary by lender but is often based on 125% of rental income, and will use a ‘stressed’ interest rate to check that your rental income will cover monthly mortgage payments in different scenarios. Not all lenders use the same formula and some will lend more generously.
- Most buy to let mortgages are arranged on an interest only basis meaning that you do not pay off any capital in the monthly repayments but would need to repay the capital in a lump sum at the end of the mortgage term.
We have access to an extensive network of lenders so we are able to advise on a wide range of mortgages to suit each of our client’s individual needs. This coupled with our in depth market knowledge means we can offer the best mortgage deals for your circumstances and make sure you are in the best possible position to proceed successfully with an application.
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