Whether you are looking to expand an existing rental property portfolio or are thinking of becoming a landlord for the first time, investing for rental income or potential capital appreciation, you will need to take out a buy-to-let mortgage rather than a standard residential mortgage.
A buy to let (BTL) mortgage is specifically designed for people who own a property to rent out and they have different criteria and features.
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Common Features of BTL Mortgages
- Interest Only. The majority of buy to let mortgages are arranged on an interest only basis, meaning that the debt is not reducing over the term of the loan. Some providers will allow a repayment basis, although this can result in stricter terms.
- Minimum deposit. Most BTL deals require a minimum deposit of 25%, however with our specialist knowledge we can often secure deals with a lower deposit of only 15% or 20%.
- Affordability assessment. Borrowing capacity is traditionally based on the amount of rental income the property is expected to achieve. However, some lenders will incorporate personal income along with rental when assessing borrowing capacity which can result in a higher loan amount
- Minimum income requirements. Many lenders will require a minimum personal income of £25,000, however some lenders have no minimum income requirements.
- Rates available. Typically buy to let rates are higher than on residential loans but the gap has narrowed over the last couple of years.
- Individual or limited company borrowers. Buy to let mortgages can be arranged in individual names or for limited companies, but not every lender will accept both and different criteria applies.
- House in Multiple Occupation (HMO). Properties are classed as a HMO if rented out by at least 3 people who are not from one household/family and share facilities. If you want to rent out your property as a house in multiple occupation in England or Wales you must contact your council to check if you need a licence. Furthermore some lenders are unwilling to offer BTL mortgage on a HMO property, an advisor will be able to point you in the right direction.
Nicholson Brown Limited is authorised and regulated by the Financial Conduct Authority under register number 671013.
Your home (or property) may be at risk of repossession if you do not keep up repayments on your mortgage or loan secured upon it.
We do not charge for our initial consultation, however we charge a brokerage fee for residential and buy to let mortgage applications. The fee is dependent upon the complexity of your case and is typically up to £500, payable upon completion of the transaction.
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