A Buy to Let (BTL) mortgage is a financial product for property investors who want to become a landlord by purchasing property to let out. The rules and principles around buy to let mortgages are very similar to standard residential mortgages, however, there are some key differences. In this article, we discuss buy to let mortgages and explain how they work.
As mentioned above, a buy to let mortgage can only be used when property investors seek funds to purchase a property in which they will let out.
New investors often believe that buy to let mortgages are difficult to obtain. In fact, getting a buy to let mortgage is very similar to a residential mortgage and in some cases can be more flexible. Investors will require a minimum deposit of 15%, though a bigger deposit will provide investors with a larger choice of lenders and this means more competitive rates.
In order to successfully obtain a buy to let mortgage applicants will need to meet certain criteria, for example proving their income. Oftentimes lenders will require proof of income in the form of payslips if employed, if self-employed investors will need to provide their latest SA302 (self-assessment tax calculation form) there are some circumstances where lenders may not need to see proof of income particularly if the borrower is an experienced landlord and has additional buy to let investments. Most lenders have no minimum income requirements however applicants must still produce proof of their income. Of the lenders who require a minimum income, this is usually no more than £25,000.
There are a number of options available for raising money to fund a buy to let investment. For example, if the applicants existing property benefits from positive equity there may be a possibility to extract the equity via a remortgage and use the funds as a deposit on the buy to let purchase. It is best to speak with our experienced buy to let mortgage brokers about this.
Some properties like those with a short lease or those built using non-standard construction methods are harder to obtain mortgages for however although the choice of products may be limited Unique Property Finance can usually find a solution.
To discuss buy to let mortgages in further detail or to find out how much you can finance get in touch with us on 020 3645 4322 or visit our website.