Buy to Let

Buy to let properties are popular as an investment for retirement or as a way to earn some extra money. If you intend to purchase a property to let, you will need to obtain a specialist buy to let mortgage. These mortgages do differ from a traditional mortgage that is used to purchase a home that you will live in.

Under new rules, lenders criteria now take into consideration your personal income and the anticipated rental income for the property. Typically, a lender will require rental income to be between 125% and 145% of the interest payments (rather than capital payments). The requirements to obtain a buy to let mortgage will vary depending on the lender and their lending criteria. They may also have specific conditions which will be determined on your financial position. A lender for a buy to let mortgage will usually undertake a stress test which will aim to establish that you would be able to keep up repayments on the mortgage if the interest rate changes or other expenses are incurred. Lenders do this to make sure that the mortgage is a good investment for them too.

Buy to let mortgages usually require a high deposit, often of around 25% of the purchase price. If you have a deposit higher than this, you can usually source much better choice of mortgage products and rates may be lower too.

Your home may be repossessed if you do not keep up repayments on your mortgage.