Buy-to-let mortgages explained.
What is a buy-to-let mortgage?
A buy-to-let mortgage is a mortgage sold specifically to people who buy property as an investment, rather than as a place to live. If you plan to rent out a new property, most lenders will prefer you not to finance your purchase with a standard residential mortgage.
Who are buy-to-let mortgages for?
Buy-to-let mortgages are powerful tools both for seasoned investors and for new landlords looking to take their first steps into the rental property market. Not everyone is entitled to take one out though: BTL mortgages are more expensive than typical mortgages and require deposits of between 30% and 40%.
Who can do a Buy to Let ?
Buy to let mortgages are available to individuals /companies or an induvial who is looking to purchase their first investment properties through their pension scheme.
How much can you borrow?
How much you can borrow will depend on your deposit, personal circumstances, and rental income. Lenders normally require you to earn more in rent every month than you repay on your mortgage.
Are buy-to-let mortgages more expensive?
Landlords seek out cheaper properties, but BTL mortgages cost more – both in higher interest rates and larger deposits – as borrowers are more of a risk to lenders than owner-occupiers
What are the tax implications of buy-to-let mortgages?
An investor is allowed tax relief on the interest of the mortgage not the capital.
Rental income is also subject to income tax, it is advisable to see professional advice before embarking on an buy to let.