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Guide on buy to let mortgages

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Mortgage specialist, Richard Lester from Apr Money Limited offers a guide on buy to let mortgages:

Guide on buy to let mortgages

What is a buy to let?

The purchase of a property for the purpose of renting out with the aim to make a profit through rental income and capital growth.

What is a buy to let mortgage?

Buy to let mortgages are a type of semi-commercial mortgage, designed to provide investors with the means to purchase property for letting and long term capital gain.

Types of buy to let mortgages

The types of products are similar to residential mortgages, with fixed and tracker rate products available.  Interest only is more common but buy to let mortgages are available on a repayment basis too.

What is the lending criteria?

Although buy to let lending is generally based on personal income, a certain level of earned income is required. The amount of mortgage is usually justified by a calculation around the rent received, compared to a notional rate of interest designed to safe guard against future rate rises. The loan is multiplied by a rate of interest typically 5.25%, and then a margin of 25 to 40% is applied. The annual potential rental income needs to at least match this figure for the loan to be agreed. Some lenders can be more forgiving, applying lower rate or lower margins, therefore it is worth getting advice before applying.

How much deposit do I need for a buy to let mortgage?

Typically at least 25%, although some specialist lenders may consider less.

Buy to let mortgage advice

John German work closely with Apr Money Limited to provide independent mortgage advice. Apr help many investors build successful property portfolios, so whether this is your first time purchasing a buy to let or you are adding to your rental portfolio we’ll put you in touch with them for expert advice.

Find out more on property investment read more…

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Date Posted

May 4, 2019

Article Category

Author

Katy Storer

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