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Find out the best way to get yourself set up as a buy-to-let landlord. Mortgages are what we do. Trust us to get you set up, save you money, and get things moving quickly so you can make the most from your investment.
What is a buy-to-let mortgage?
A buy-to-let mortgage is a type of mortgage designed specifically for those who want to purchase a property to rent out, rather than live in themselves. Whether you're an experienced landlord looking to expand your property portfolio or a first-time investor, a buy-to-let mortgage can help you finance the purchase of a rental property. Unlike standard residential mortgages, buy-to-let mortgages are assessed differently, with lenders often focusing more on the potential rental income from the property than on your personal income or affordability alone.
The amount you can borrow is related to the expected rental yield, not the borrower’s income.
Typically, you’ll need 25% of the property’s value for your deposit. Fees are often higher, too. But this depends on the lender.
There are different ways to repay a buy-to-let mortgage – from interest only, repayment, or part and part.
Who is Eligible for a Buy-to-Let Mortgage?
- Age Requirement. You must be at least 21 years old, although some lenders may set the minimum age at 25.
- Homeownership. You usually need to already own your own residential property, either outright or with a mortgage.
- Income Threshold. Many lenders have a minimum annual income for buy-to-let mortgages, which is often around £25,000. This ensures you can cover potential vacancy periods or maintenance costs.
- Credit History. A good credit score and clean credit history are usually necessary. Lenders will assess your credit file to determine your reliability as a borrower.
- Affordability and Rental Income. Lenders normally require that the expected rental income covers at least 125% of the mortgage repayments.
- Property Suitability. The property you intend to let must be suitable for rental purposes, which means it should be in good condition, meet safety standards, and be located in an area with rental demand.
Working with a specialist mortgage broker like Mortgage Matters can make the process easier by helping you find suitable lenders and guiding you through the application process, ensuring you get the best possible deal.
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What to Consider When Getting a Buy-to-Let Mortgage
Before applying for a buy-to-let mortgage, there are several important factors to keep in mind. First, it’s essential to calculate the potential rental yield, which is the rental income as a percentage of the property’s value, to ensure your investment is financially viable. You should also plan for vacancy periods, which are times when the property might be empty and not generating any rental income.
As a landlord, ongoing maintenance and repairs are your responsibility, so it’s important to budget accordingly. Another key consideration is tenant management; you’ll need to decide whether to manage tenants yourself or hire a letting agent, both of which involve different costs and responsibilities. Additionally, staying up to date with UK landlord regulations, safety requirements, and local authority licensing schemes is crucial to avoid legal issues.
Working with a mortgage broker can make this process easier by helping you assess your financial situation and compare available deals. At Mortgage Matters, we specialise in supporting both first-time and experienced landlords to secure the most competitive mortgage products tailored to their needs.