What are Buy-to-Let Mortgages?
If you’re buying a property with the intention to rent it out, then you’re going to have to go for a buy to let mortgage. Read on to find out more!
In recent years, purchasing a property to let mortgage has become an increasingly popular option for a vast number of people due to the current, low returns on savings. As a result, stepping into the property game, as a landlord has become a lucrative and much sought after position in the UK. So, whether you’re just looking to get a buy to let mortgage or get a buy to let remortgage with another lender, you’re in the right place! Read on to follow our top tips.
What is a buy to let remortgage/mortgage?
A buy to let mortgage basically is the same as a residential mortgage with the one exception of, the people residing in the property have to be paying tennants & not the home owner.
They are traditionally offered by banks and building societies and tend to have higher interest rates than residential mortgages. If you’re wondering why this might be, it’s because of the risks that this poses to lenders. For example, if you’re letting a property to a group of people that the lender has no control over, they might not possess the financial backing to make rent payments. This, in turn, can cause problems, as the landlord may now not be able to make payments on the buy to let mortgage.
Can I better a mortgage deal depending on my buy to let deposit?
Although there are a few lenders offering mortgages with just 20% deposit, most lenders require a minimum of 25% deposit. For the best rates in the market you are going to need to have a 40% deposit. This is because lenders want to see large deposits, excellent rent prospects and a landlord with a strong financial history. So, if you want to get the most out of your buy to let mortgage, make sure you tick these boxes!
Buy to let mortgage rates:
Buy to let mortgage rates vary depending on what lender you’re with. Like most mortgages, this is going to be dependent on a number of factors. For example, how responsible you appear as a borrower, how large your deposit is, your credit score & the amount of rental income the property will achieve!
While you might think you tick all of these boxes or none at all for that matter, we always recommend going to talk to your lender to see what deals that they might have for you on the market. They can help direct you on the sort of rate you should expect from them before you commit to any deal. Alternatively, if you’re already on a deal and you’re not happy with the rate your current lender offers, this can offer a perfect opportunity for a buy to let remortgage. Remember, initial rates are different to what interest rate you’ll be on after your incentive period ends, so be wary!
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