Buy-to-let (BTL) mortgages are for landlords who buy property specifically to rent out. They are usually more expensive than normal mortgages, but they could help you become a property investor. Credit subject to status. Freedom Finance is a credit broker and not a lender.
Second charge mortgages from 5.1% APRC. Second charge mortgage representative example (If you choose to add fees to the loan).Assumed borrowing of £35,000 over 120 months, plus a broker fee of £2,870 and lender fee of £367.50 would result in monthly repayments of £476.14, the borrowing rate is 8.6%, the APRC is 11.2% (variable), total charge for credit would be £22,136.80 and the total amount payable would be £57,136.80. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Buy-to-let mortgages are only suitable for people who want to invest in houses and flats. Investing in property is risky, so you shouldn’t take out a BTL mortgage if you can’t afford to take that risk. You’ll struggle to get a buy-to-let mortgage if you don’t already own your own home, whether outright or with an outstanding mortgage. You must have a good credit record and not be stretched too much on your other borrowings such as your existing mortgage and credit cards. And you are likely to find it harder to get a buy-to-let mortgage unless you earn at least £25,000 a year. Lenders will have their own upper age limits – typically between 70 or 75. This is the oldest you can be when the mortgage ends not when it starts. For example, if you are 45 when you take out a 25-year mortgage it will finish when you’re 70.
Buy-to-let mortgages are in many ways just like ordinary mortgages, but with some key differences:
Most BTL mortgages are interest-only, which means you don’t pay anything off the lump sum borrowed each month but, of course, at the end of the mortgage term you repay the capital in full.
Unlike obtaining a mortgage on a property you wish to live in, BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA) unless you wish to let the property to a close family member (e.g. spouse, civil partner, child, grandparent, parent or sibling), then the mortgage is known as a Consumer Buy to Let mortgage and is regulated by the FCA.
The maximum you can borrow is linked to the amount of rental income you expect to receive. Lenders typically need the rental income to be a quarter to a third higher than your mortgage payment (25–30%).
To find out what your estimated rent might be, talk to local letting agents or check the local press to find out rent charged for similar properties.
A buy-to-let property investment may be right for you if you:
Most of the big banks and some specialist lenders offer BTL mortgages. It’s a good idea to talk to a mortgage broker before you take out a buy-to-let mortgage, as they will help you choose the most suitable deal for you. A further option when purchasing another property is to obtain a second charge mortgage, using your existing home as collateral.
Our aim at Freedom Finance is to provide you with the information you need to make educated decisions when it comes to your borrowing and your money. The online financial market place is filled with conflicting, jargon-filled information about which loan product is the right one for you.
These deals may look attractive, but many of them apply only to those with an outstanding credit history. In reality, the best deal on offer might not be available to you. With our comprehensive finance guides, we aim to equip you with the know-how to make the best decisions about your borrowing and your money.
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Whether you're planning on some home improvements, replacing your car or simply getting your finances in order, a loan from Freedom Finance could be more affordable than you think. Use our calculator above to find the ideal loan for you. All quotations given are for illustrative purposes only. Credit subject to status. The rate you are offered will depend on your personal circumstances, credit assessment procedures and other related factors.