If you are thinking about purchasing property to rent out, you will also require a suitable mortgage to secure your investment. However, the normal residential mortgage is not available to landlords and you will require a specialist Buy-to-Let mortgage instead.
Whilst these Buy-to-Let mortgages have lots of similarities to the standard loans, there are a few key differences that any multi-property investor or prospective landlord should be aware of.
It is for this reason that the team here at White Horse Surveyors have put together the following article – outlining all the essential information…
What Are Buy-to-Let Mortgages?
Buy-to-Let mortgages are a specialist loan for landlords looking to purchase property that they will later rent out.
How do Buy-to-Let Mortgages Work?
Many Buy-to-Let mortgages are interest-only. This means that your monthly repayments will only pay-off the interest on the loan and not the actual capital (the full sum of the loan).
As a result, this means that your monthly repayments will be less than with a normal residential mortgage. However, you must be financially prepared to either pay off the loan in full, sell the house or remortgage at the end of your term.
Another major difference between standard residential loans relates to the amount that you can borrow. Whereas a standard mortgage is based on your salary, Buy-to-Let is based on the rent that you are planning to charge tenants. This means that if you purchase a larger and more desirable property, you will be more likely to secure a larger loan.
Who Qualifies for a Buy-to-Let Mortgage?
Because many lenders see these loans as a high-risk investment, the criteria are also much stricter.
More specifically, to qualify for a Buy-Let-mortgage you must fit the following criteria:
• You are an existing homeowner (for at least six months) – with a mortgage or outright
• You are a landlord looking to invest in property
• You are 45 years old or younger (companies will have upper age limits to account for the end of the mortgage term)
• You are financially stable and understand the risks associated with property investment
• You earn over £25,000 and have a good credit score
However, it is also important to remember that certain providers will have different requirements – meaning that this should be taken as general advice ONLY.
If you are considering investing in property, our team can provide expert and impartial advice on your best course of action. Feel free to call us on 01249 444465 or via email at .