A buy-to-let mortgage is a property that people purchase or inherit as an investment.
These types of mortgage deals are tailored around the rental yield of the property at a maximum of 85% however the majority of Buy to Let deals are obtained on 75% LTV product. You will also need to take into consideration your personal tax threshold, i.e. whether a basic or higher rate tax /additional rate payer.
Typically, with these types of deals you’ll need a bigger deposit, you may pay higher fees to the Lender as arrangement fees and you’ll may pay a higher rate of interest.
Buy-to-let mortgages are usually offered on both interest-only and repayment basis, where as a majority of residential mortgages are often only on a repayment basis
Most Lenders use rental income to calculate affordability and the majority of Landlords with a buy-to-let mortgage expect their monthly mortgage payments to be covered by the rent they receive. Currently Lenders have tightened up their criteria and operate a ‘rental stress rate’ which can be difficult to assess.
It is imperative therefore that prospective BTL landlords use an experienced advisor to ensure they receive the best possible advice in order to obtain the most suitable Lender to their needs.
This might sometimes be a ‘niche’ Lender not always available on the High Street.
The government has produced cuts to the mortgage interest tax relief and wear and tear allowance.
This in turn has resulted in some landlords setting up Limited companies (SPV) for their buy-to-let properties, so we are seeing a lot more landlords offsetting their assets to a Limited company to help them achieve a more suitable loan.
Again, this should be considered only with the help of a suitably qualified advisor to ensure you are getting the very best advice, specifically as regards the capital gains and stamp duty issues connected with moving your mortgage
If you are serious about purchasing a Buy to Let property as an investment for your future please take professional advice from a mortgage expert.
Likewise, if you currently own BTL properties and which to secure a better or more appropriate deal, the same applies.
Always seek professional advice from an experience, qualified expert.