Buy to Let

THE LOWDOWN ON BUY TO LET

This short video tells you what to expect when you call us for mortgage advice. It’s a really simple, straightforward process and remember our expert advisers are available to help you 5 days a week.

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What is a Buy to Let Mortgage?

A Buy to Let (BTL) mortgage is for applicants who are either looking to a rental portfolio or build up their existing one. A BTL mortgage is designed for landlords or perspective landlords who are looking to rent out their property to tenants.

How much deposit will I need for my BTL Mortgage?

For a BTL mortgage you will generally need a 25% deposit a deposit at this rate will give you a loan to value (LTV) of 75% thus opening up most lenders to you subject to income. If you would like to put down a smaller deposit you will be less likely to obtain a mortgage or be saddled with subprime lenders who generally have much higher interest rates. In terms of deposit being put down it is like residential mortgages the larger the deposit that you can afford, the better the interest rate will be applicable to you.

How is borrowing worked out for BTL Mortgages?

With BTL mortgages it is worth noting that lenders view BTL Mortgages as self-financing properties. Thus lenders work out how much they are willing to lend by making sure the rental income is 125% of the monthly mortgage payment, for example if your mortgage payment is £1000 per month the lender will be expecting you to receive a minimum of £1250 per month. It is also worth noting that while most lenders do view BTL mortgages as self-financing there is usually a minimum income requirement of £25,000 however there are a small amount of lenders that do allow no minimum income requirement. Whatever your mortgage requirements or personal circumstances, we at Rainstone Money are here to help make this process as simple as possible in order for you to obtain you BTL property. We can provide you with the best mortgage deals and expert mortgage advice in order to make this process as straight forward as possible.

Are deals different for BTL Mortgages than that to residential Mortgages?

Deals for BTL mortgages are very similar to that of residential mortgages in that you have,

Fixed rates- where the lender will fix an interest rate for a certain amount of time such as 2 years, the fixed rate deals are the most popular as they give you ‘peace of mind’ for the length that your mortgage payments have been fixed for as you know your mortgage payments will not change for that period of time. After your fixed period ends you will be placed on the lenders Standard Variable Rate (SVR) which is usually a higher interest rate.

Tracker- tracker deals are some of the lowest rates available. This rate tracks the Bank of England (BoE) base rate which now is at an all-time low of 0.25% plus a percentage which is set by the lender that you decide to use. An example of a tracker rate would be the BoE base rate of 0.25% plus another 3% giving you a rate of 3.25%.
There are also other variable rates available such as discounted or capped mortgages which give either give a discount on the standard variable rate or cap the standard variable rate at a certain amount. These rates again are only for a certain length of time and then you will be reverted back to the lenders Standard Variable rate.
With all these rates you should be aware that BTL mortgages will have higher rate interest rate than that of residential mortgages.

Can I re-mortgage my BTL Mortgage?

There are a number of reasons to re-mortgage you BTL mortgage as you may be languishing on the lender’s standard variable rate thus by re-mortgaging you will most likely obtain a better rate and your monthly payment will go down. You may also want to release funds from your BTL property and a re-mortgage will aid you in that process. You may also want to move to another lender which has certain attributes that your current lender does not have such as making overpayments on your mortgage.
There are many BTL mortgage deals out there on the market, and here at Rainstone Money, we will aim to ensure that you get the best deal possible for your certain needs and we will endeavour to make the process as simple as possible for you to find the right mortgage.

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