Buy to Let


A rental property can be a great asset, providing you with regular income as well as being an investment for the future. Whether it’s your first venture or you’re expanding your portfolio, we can find you the right mortgage, so all you have to do is find the right tenant.

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A buy-to-let mortgage is type of mortgage that allows you to buy a property for investment purposes. This means, that you plan to rent out the property for someone else to live in.

Yes, for a buy-to-let mortgage, you’ll need at least a 25% of the property’s value. There’s several ways to raise the funds, including taking out a secured loan.

That depends on the property and how much rental income you can expect to receive. Most lenders would want your monthly rental income to be 125% of your monthly interest payments. For example, if your monthly interest payments were £500, then the lender would expect you to charge a minimum of £625 in rent.

Buy-to-let mortgages are seen as a little riskier for the lender, because the property is being lived in by a third party (your tenant). As a result, the interest rates can be a little higher, to reflect that risk and you will need a larger deposit (between 25% – 40%).

Most buy-to-let mortgages are arranged as interest-only mortgages, meaning that your monthly payments will only cover the interest, and you’ll pay off the mortgage in full at the end of the term (usually through the sale of the property – although if house prices fall, you will have to make up any shortfall).

No, you can’t. Buy-to-let mortgages are specifically for houses that are to be used as investment properties and are rented out to other people.

This is because lenders work out the affordability in a slightly different way – buy-to-let mortgages are based on the rental income the property might make, and residential mortgages are based on your personal income.

That depends on the overall condition of the property. If the house is habitable, then you may be able to get a buy-to-let mortgage. If it’s not fit to be occupied, or needs a significant amount of work to make it fit to live in, then other finance, such as a bridging loan, is likely to be more suitable.

You should get in touch with your mortgage lender and let them know so you can either change your mortgage from a residential mortgage to a buy-to-let, or get the lender’s permission to let out the property. Permission from the lender is called “consent to let.”

If you have a residential mortgage and rent out your property without the lender’s permission, you will be breaching the terms of your mortgage contract, which requires you to be living in the property. The lender will view this as mortgage fraud, and you could face financial penalties, be forced to repay the mortgage in full, or could even have the property repossessed.

Consent to let might be better than a buy-to-let mortgage if you are only intending to let the property for a short time, or if you’re in a fixed rate mortgage and don’t want to pay early repayment charges.  

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Second Charge

Representative example: A mortgage of £75,000 on interest only payable over 25 years, initially on a fixed rate of 1% for 13 months and then a standard variable rate, currently 4.74%, for the remaining 287 months. This would require 13 monthly payments of £63.75 and then 287 monthly payments of £302.18 (this includes a broker fee of £750 and a lender fee of £1500 to be paid upon completion). The overall cost for comparison is 4.8% APRC.