If you’re looking to buy a property with the intention of letting it out for a rental income, you’ll need a special ‘Buy to Let’ mortgage. Buy to Let mortgages differ from normal residential mortgages in a number of ways – they have different terms and conditions, they’re priced differently, and different factors will be taken into account when you make your application.
As Buy to Let represents a specialist segment of the mortgage market (falling somewhere between residential and commercial lending) it’s important to take advice from people who understand the lenders’ requirements. With The Good Mortgage Company, you can be assured that our advisors have experience of the Buy to Let market – which often falls outside of the well-known high street banks and building societies. Fill in our mortgage quote form for initial advice, and let us help you through the mortgage journey.
Most lenders consider Buy to Let mortgages as representing a higher risk than normal residential lending – you may not always have tenants in the property, and therefore constant rental income is not guaranteed. This risk is reflected in both the application underwriting, and how lenders price their Buy to Let mortgage deals.
You will be expected to put down a larger deposit on the property – typically 20% or more. Arrangement fees and interest rates will also normally be higher than an equivalent residential mortgage.
When you apply for a Buy to Let mortgage, be prepared to provide different information from a ‘normal’ mortgage application. Usually the lender will want details of the projected rental income compared to the mortgage expenditure. Generally, the rental income you receive must be at least 125% of the interest payment on the mortgage, although in some cases the lender may also be willing to take your salary or other earnings into account.
When looking at properties, make sure you do your research before buying. Find out what type of properties are in demand and choose a location that will be sought after, such as those close to local amenities.
Take the time to read through our guides on ‘Why get a Buy to Let mortgage?’ and ‘How to calculate your earnings on a Buy to Let mortgage’ for more detailed information on this topic.
We charge a fee for arranging your mortgage. The precise amount depends on your circumstances but will typically be £500. We will also be paid commission from the lender. We charge no fee for insurance advice. If you arrange insurance through us the insurer will pay us a commission.
In general Buy to Let Mortgages are not regulated by the Financial Services Authority.
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