Buy to LetBuy to Let Mortgages

If you want to buy a property with the intention of letting it out to tenants, you will need to think about a buy to let mortgage.

Lenders will take rental income into account as well as your income when considering you for a buy to let mortgage, but essentially it works just like a standard mortgage.

You will need a larger deposit to get a buy to let mortgage as there is a greater risk to the lender – if a tenant stops paying rent or leaves the property and it is empty for a period of time, you might have difficulty meeting your mortgage repayments. This is something you need to consider when looking at buy to let.

The recent and current economic situation, has had an effect on the buy to let mortgage market. Interest rates are higher, bigger deposits are needed and lending criteria is more stringent than it has ever been.

What to look for before you start

  • Buy to Let mortgages can be a risky undertaking – do your research on whats available, demand in your area and affordability.
  • When choosing a property to buy, remember you are buying it to house a tenant and not yourself, so look for the type of property that would attract potential tenants and not necessarilly what you might choose for yourself.
  • Choose the location of your new property well. Research the areas that are most suited to tenanted property.
  • Don’t forget to factor in maintenance into your potential costs. If something goes wrong with the property, you will be liable to fix it so you have to allow for that.
  • If you use a letting or property management agent, they will usually charge 15% to 20% of the rental income per month to look after the property for you, plus additional amounts to find tenants for you.
  • Research the market for the best Buy to Let Mortgages or use a specialist mortgage broker or Independent Financial Adviser, but remember thet may charge a fee for their services.

We found a short useful video on the Money Advice Service website that may help.