How much is a buy to let mortgage?
A buy to let mortgage is designed for individuals who plan to purchase property with the purpose of renting it out. It differs from residential property buying in that lenders take into account your income, deposit and other financial factors when determining how much you can borrow for this type of mortgage.
How Much Can I Borrow?
Lenders typically assess how much rental income you can generate from a property and whether this income will cover your mortgage payments. This calculation, known as the ‘loan to value’ ratio, should be easy for you to estimate using our buy to let mortgage calculator.
When considering whether to buy a property for a buy to let mortgage, you should also factor in costs such as letting agent fees, repairs and insurance into your budget. These can add up quickly, so try to keep the total cost as low as possible when comparing BTL mortgage deals.
The minimum deposit amount for buy to let mortgages is usually higher than for standard mortgages – often 25%; however, some lenders require a larger deposit of 40% or more. Furthermore, arrangement fees tend to be higher on buy to let mortgages, so make sure to factor this into consideration when comparing rates and costs among various lenders.
How long does it take to obtain a buy-to-let mortgage?
On average, applications for this type of loan should take between two and three months; however, you could expedite the process if all necessary paperwork is submitted ahead of time. A reliable mortgage broker can guide you through this process and offer guidance on which lender best suits your needs.
What are the risks of a buy to let mortgage?
Buy to let mortgages can be an investment with significant risks, but they could be worthwhile if you have the means and expertise. Problem tenants who fail to pay rent or damage the property could cost you money in repair expenses; additionally, decreased rental income may mean that your payments don’t cover costs associated with keeping up with repairs and maintenance.
How can I find the best buy to let mortgage deal?
A reliable broker is invaluable when searching for a mortgage deal. They will search the market to locate the lowest rates and help compare offers from multiple lenders so you find one that meets your requirements. Moreover, they provide guidance on current finances as well as potential tax breaks available to landlords.
Can I remortgage my existing home to purchase a property for a buy-to-let mortgage?
Remortgaging your buy to let property is usually possible to free up some cash. However, be aware that doing so could increase your interest rate, so it’s wise to consider this option before proceeding.
Can I borrow more than the home’s value?
A larger deposit may help you secure better rates on a buy to let mortgage. Plus, having extra funds available allows for the initial loan not to have interest charged and to take out cheaper repayment mortgages that allow you to pay off your original balance when the term ends.