MORTGAGE BROKER IN KENT, LONDON & SOUTH EAST
BUY-TO-LET MORTGAGES
Buy-to-Let Mortgages allow you to purchase or remortgage a residential property, with the intention of letting it out to tenants on an investment basis.
What Is A Buy-To-Let Mortgage?
A Buy-to-Let mortgage is a type of loan specifically designed for individuals or property investors who wish to purchase a residential property and have the intention of renting it out to tenants. This type of mortgage is used as a popular investment strategy for those seeking to generate rental income and potentially benefit from appreciation of the property, over time. Learn more with our Buy To Let Mortgage FAQs >
Who Is A Buy-To-Let Mortgage For?
Anyone who wishes to purchase a property to rent it out to a tenant. Buy-to-Let mortgages can also be taken out by Limited Companies, including specific Limited Companies that have been set-up to hold property, also called Special Purpose Vehicle (SPV) or Trading Limited Companies who wish to add property to their investment strategy.
What Are The Advantages Of A Buy-To-Let Mortgage?
Buy-to-Let mortgages are specifically designed for a property that is rented out (or due to be rented out) They are assessed on rental income (rental coverage ratio) and don’t usually require as much underwriting as other types of mortgages.
In some cases, the applicant does not need to have a personal income if they can demonstrate that they are living withing their means.
There is also usually the option of ‘pure interest only’, where the repayment vehicle is sale of the mortgaged property at the end of the mortgage term. This means that investors may benefit from the difference between the rental income and the mortgage payment.
What Are The Disadvantages Of A Buy-To-Let Mortgage?
Lenders often require a larger minimum deposit, typically ranging from 20% to 25% of the property's value, used as an indication of the borrower's commitment and to mitigate the perceived higher risk associated with investment properties.
Most Buy-to-Let mortgages are not regulated, as the FCA consider these to be a business transaction. This means that the borrower should do more of their own due diligence before proceeding as they will not have any redress from the FCA if things go wrong.
Examples Of Where A Buy-To-Let Can Be Used
The scenarios where a buy-to-let mortgage can be used are varied but include:
Single tenancy residential rental properties
Holiday let properties
Houses in Multiple Occupation (HMOs)
Multi-Unit Freehold Blocks (MUFBs) with multiple units on one title
Let-to-Buy scenarios (renting out current residential property and buying a new one to live in)
​Most circumstances where the property is residential and being (or due to be) rented out
Process And Documentation Required For A Buy-To-Let Mortgage
The process includes:
Mortgage enquiry
Agreement in principle
Full mortgage application
Mortgage offer
Documents required:
Proof of ID
Proof of address
Bank statements
Proof of income
Proof of deposit
Tenancy agreement (if tenanted)
