A buy-to-let mortgage is specifically designed to finance properties that are purchased with the intention of renting them out. Without a BTL mortgage, you won’t usually be permitted to let out a property for profit unless you own it outright.
What is a buy-to-let mortgage?
You may need to consider a buy to let mortgage if you are:
Buying a house to rent out for additional income or an accidental landlord, if you’ve decided to let out a property you’re unable to sell, or have inherited.
What’s the difference between residential and buy-to-let mortgages?
Unlike residential mortgages, where you take a loan on a property you are going to live in, a buy-to-let mortgage holder is not permitted to live in a BTL property; these types of mortgages are specifically designed for third party letting.
Most residential mortgages are repayment plans, which means you repay a portion of the loan and interest every month. A lot of UK BTL mortgages on the other hand are interest-only, meaning you will only repay the mortgage interest each month. This means you will still owe the full loan balance at the end of the mortgage term.
Eligibility requirements are slightly different for BTL mortgages, including how affordability is calculated. For residential mortgages, this is based on personal income and expenses.
For BTLs, although lenders may factor personal circumstances into their calculations, the determining factor is based on the strength of the investment and projected rental income.
If you would like to find out more about BTL mortgages please get in touch.
