Buy To Let Mortgages

If you’re buying a property as an investment, with the intention of renting it out, then you’ll need a buy to let mortgage. There are several differences between conventional and buy to let mortgages. It’s therefore important to understand how they work before you go ahead.

Alexandra Bonnar
Alexandra Bonnar
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The Mabbutts
The Mabbutts
Ivan has provided us with outstanding service. He has gone above and beyond what we expected. He helped us with our mortgage when moving house. We will be returning every time our mortgage is up for renewal.
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Daniel Fardell
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Antonio Banderes
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Lee Wigglesworth
Lee Wigglesworth
I highly recommend Ivan at Elementary Mortgage Solutions. He was very helpful, always talking me through things I was unsure about putting my mind at ease. He helped me through a time length of 18 months and was always easy to get hold of and quick to reply if ever I needed him.
Dean Warsop
Dean Warsop
My mortgage application went as smoothly as it could with the help of Ivan who went above and beyond with his time and efforts to get it sorted as soon as possible. Everything he did was explained in terms I could understand and he was never more than a phone call away to answer any questions we had. I couldn’t recommend Ivan highly enough and have passed his details to numerous friends. All I can add is my gratitude to Ivan for his hard work and being available every step of the way. A fantastic man and very good at what he does. Many thanks again
Robyn Kirk
Robyn Kirk
We didn't have the easiest circumstances however ivan was very honest with us from the beginning. He outlined a number of options for us and when the time came for us to apply for a mortgage the process was easy and stress free due to ivan's brilliant communication and transparency. We couldn't thank ivan enough because he made it possible for us to get our first home.
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Andrew Littlewood
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Steph Lonergan
Steph Lonergan
Would highly recommend using Elementary Mortgage Solutions. Done amazing at finding us the best mortgage for our new home. Very helpful and always available if need to ask any questions, worth every penny.
Will Shaw
Will Shaw
Ivan was absolutely amazing from start to finish. We had a few set backs on our side of things due a global pandemic and then several houses falling trough but he never gave up, he kept going for us and kept us updated regularly and we have now finally got the keys to our very first home just intime for Christmas. He made the whole process a breeze sorted all our insurance's out for us so we had the right cover at the right budget. Honestly 5 stars doesn't even come close wouldn't hesitate to recommend him and Elementary Mortgage Solutions to anyone.

(Your home may be repossessed if you do not keep up repayments on your mortgage. Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority)

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What is a Buy To Let Mortgage

When you buy a property to rent out rather than live in, you won’t be able to finance the purchase with a standard mortgage. Instead, you will be required to take out a buy to let mortgage. These are aimed specifically at people buying properties as an investment.

Buy to let mortgages differ from standard mortgages in several ways.

The Financial Conduct Authority (FCA) regulates residential mortgages, however, buy to Let mortgages do come fall under their jurisdiction.

The loan amount on a residential mortgage is based on your personal income minus your outgoings and other commitments as well as the property valuation.

The loan amount on a buy to let mortgage is based on the achievable rent as well as the property valuation.

Interest rates and fees tend to be higher on buy to let mortgages as lenders deem them to have more risk.

The majority of standard residential mortgages on the market today are repayment mortgages. With a repayment mortgage, you will repay both the interest charged and the original capital. <

With But to Let mortgages, you can choose between interest only and capital repayment. If you choose an interest only mortgage, you will only pay back the interest on the loan rather than the loan itself. The result is that your monthly repayments are lower. However, at the end of the mortgage term, you still owe the original capital.

What Deposits Are Required

As lenders consider a buy-to-let mortgage a higher risk than standard mortgages, they generally ask for a larger deposit. Deposits will vary from lender to lender but are typically between 15% – 40%.

From the buyer’s perspective, it can be more difficult to raise a larger deposit. On a positive note, it does have the benefit that when the mortgage comes to an end, the capital owed is less.

Buy To Let Mortgages – Fees and Expenses

Like most Mortgages, buy-to-let mortgages can have fees attached such as arrangement and valuation fees. However, it is possible to get these free or have the option to add them to the loan.

On top of this, another cost to consider, and one that you will need to pay, is Stamp Duty. This starts at 3%  and was introduced in 2016 for anyone purchasing an additional property.

You will also need to factor in letting agent fees, solicitors costs and landlord insurance.

Any income generated from the property will also be taxable.

Who Can Apply for a Buy To Let Mortgage

The requirements will again vary between lenders.

Most high street lenders will look for a minimum personal income of £25,000 a year and will not lend past the age of 70-75. They will also require you to own your own home.

However, several specialist lenders have no minimum income threshold or a maximum age limit to which they will lend.

Some will also consider 1st-time buyer/1st-time landlord applications.

Find Out More

The buy to let mortgage market can be complex. As this type of mortgage is considered a higher risk the lenders scrutinise each application much more closely.

At Elementary Mortgage Solutions we specialise in the buy to let mortgage market. We work with both portfolio landlords and those who are taking their first steps into the sector. Our mortgage advisers have many years of experience and can not only help you find the best deals but also navigate the tricky mortgage process.

To speak to a member of our team please call us on 0115 7845780 or send your enquiry through our contact form.