Buy-to-Let Mortgages Made Simple
Buying a rental property in the UK can feel like a big step – but you don’t have to figure it out alone. Whether you’re just starting out or you’ve done this before, we’ll help you find a BTL mortgage that actually works for you.
No confusing jargon – just clear and honest advice from people who know the UK buy-to-let market inside and out. We’ll help you through it, keep things simple, and make sure you feel confident and well-informed the whole time.
Buy to Let Mortgages Available For:
- Single let properties
- Multi-let properties and HMOs
- Commercial let properties
- Refinancing of existing buy to let mortgages
The letting of properties has always been a reliable source of income for UK landlords. Despite the fall of the entire housing sector back in 2008, the property letting’s marketing has continued to grow. This is mainly because of the fact that many potential homebuyers find it so difficult to qualify for mortgages and save up a sufficient deposit.
In addition, the increase in mortgage interest rates since Covid makes it even tougher for borrowers to keep up with the repayments. In such cases, renting a flat or a house becomes the most affordable and reasonable option.
Moreover, many property investors do not agree with the returns on their investments that savings accounts, volatile stock shares or pension funds give. Thus, investing in a property to generate a steady but safe stream of rental income becomes a good option. The first step towards investing your time and money into being a landlord invariably requires you to look for an affordable buy to let mortgage.
Try our Buy to Let Mortgage Calculator today to see how much you can borrow and what you’re monthly payments will be.
Key Features of Our Buy-to-Let Mortgage (BTL Mortgage) Services
- Buy-to-let mortgages customised for your project
- Over 10 years of experience in broking flexible buy to let mortgages
- Affordable interest rates
- Relatively lower deposits
- Fixed rate BTL mortgages as well as tracker BTL mortgages available
- High LTV ratios (up to 85%)
- Buy to let mortgages available for single lets, multi-lets, HMOs and business lets
- Offers from responsible, experienced lenders
- Easy application, fast decisions (within 24 hours)
- No hidden fees
- Free quotes available
Buying to Let – Balancing Risks and Rewards
Buying-to-let is still a comparatively safe way of generating regular income. However, would-be landlords must always keep in mind the risks that come with such investments.
Let’s try to weigh these risks with corresponding rewards.
The Inherent Value of the Property
Most landlords don’t want to forever ‘hold’ the property they are letting. So, at some point, they look to sell the property, chiefly to settle the BTL mortgage. If the housing market is in good health, such investments usually return sizeable returns after the mortgage and taxes are paid for. In fact, a large share of the overall profits from buy to let ventures comes after selling the property. On the other hand, if the price of the property goes down for some reason, you will be left to make up for the difference while repaying your BTL mortgage. As a rule of thumb, landlords should make sure that they are able to bear a loss of up to 30% of the property value, if, unfortunately, the property prices slump at the time of resale.
The Rental Income
Few investments can yield a reliable stream of monthly income. Buying to let is definitely one of them. So, it’s safe to say that the rewards that come with such ventures in this regard are attractive. However, it is vital to know that finding suitable tenants for your property isn’t always easy. In fact, you will invariably have to deal with ‘cold’ (void) months during which your property isn’t let to its maximum capacity.
Taxes and Other Inevitable Expenses
From stamp duties to local council taxes, a number of components need to be accounted for while you draw up your buy to let numbers. In addition, regular refurbishments, compliance with codes and disputes are just a few of many factors that can skew your buy to let balance sheet adversely.
Buy to Let Mortgages – Check Your Eligibility
The eligibility criteria for BTL mortgages, although quite similar to other mortgages, are in the league of their own. Lenders foresee a significant level of risk while agreeing to lend money for such projects. Hence, you need to qualify on numerous eligibility criteria to be eligible for a buy-to-let mortgage. This shouldn’t, however, discourage potential landlords from applying, as many lenders tend to relax these criteria if they are satisfied with your repayment potential.
Common Eligibility Criteria for BTL Mortgages
- Most landlords require the borrower to be at least 25 years of age. This is in stark contrast with most other mortgages where the age bar sits at 18 years. Lenders also prefer making sure that you are no older than 70 by the time the mortgage tenure concludes. For example, if you are presently 50, you are most likely to get BTL mortgage offers with a term of 15-20 years.
- Lenders are more likely to accept BTL mortgage applications from landlords who already own a property.
- You will find it much easier to secure a buy to let mortgage if your credit score is healthy and your history of repayments is spotless. Having no outstanding loans or credit card bills in your name is another advantage to have.
- If you are applying for a buy-to-let loan, you need to have a reliable, consistent stream of income. Applicants who earn in excess of £25,000 per year have a very good chance of getting a buy to let mortgage.
- Another important eligibility criterion is the deposit. While it is indeed possible to get an LTV of up to 85% if you have a clean credit record, landlords should look to invest at least 25% of the property value as a deposit. This brings the LTV down to 75%, attracting more offers and better BTL mortgage deals.
- Buy to let mortgages are interest heavy. So, lenders like to ensure that the borrower can settle the interest payments every month from the rental income. The present norm for the rent to interest ratio stands at 125 to 130%. So, if the monthly interest on your buy to let mortgage comes at £1,000, your property needs to generate a monthly rental income of £1,250 or more.
Give our Free Buy to Let Mortgage Calculator a try to calculate your monthly BTL mortgage costs.
Why Choose Commercial Finance Network?
If you are planning on buying a property to let, it’s important that you know and understand the risks very clearly. What’s also important is ensuring that you don’t get into a BTL mortgage that isn’t the best for you.
This is where a leading whole of market mortgage broker like Commercial Finance Network can be a great asset to have on your side. Our extensive experience of broking and negotiating hundreds of buy to let mortgage deals puts us in a position from where we can judge the potential of your project better, thus allowing us to match your application with suitable lenders.
“You will be keeping your Buy to Let mortgage for many years – if not decades. So, it’s very important to know that you’re getting a fair deal. Commercial Finance Network holds a peerless track record of broking fair, affordable and tailored BTL mortgages for new as well as experienced landlords across the UK.”
Here are the prime factors that make our BTL mortgage services a go-to name for UK landlords:
- Being truly independent, we have access to the entire range of Buy to Let Lenders, allowing us to find just the right lender for your buy to let mortgage application.
- Our BTL loan offers are fully customised to match your exact requirements.
- From single lets to HMOs, we cater to all of the particular mortgage requirements.
- Working closely with lenders allows us to expedite the release of funds to your account. Your buy to let venture is just as important to us as it is to you.
- We can offer some of the most competitive buy to let mortgage interest rates.
- Our unique customer service portal is available 24×7, giving you real time status updates on your BTL mortgage application.
Buy to Let Mortgages and Regulations
Traditionally, most aspects of BTL loans have remained out of the purview of the Financial Conduct Authority (FCA), barring crass dereliction, irresponsible behaviour or gross misconduct by any of the parties involved. This, however, has changed with the enforcement of the Mortgage Credit Directive.
As per the directive, the FCA will regulate any BTL mortgage that comes under the ‘consumer loans’ category. To put it simply, first-time landlords have the luxury of declaring their buy to let venture as a consumer venture and not a business venture.
Fixed Rate BTL Mortgages vs Tracker BTL Mortgages
When it comes to buy to let mortgages, landlords need to choose from the two broad categories. These categories are based on the interest rate that will be applicable for the lifetime of the loan.
Fixed Rate BTL Mortgages
As the name suggests, fixed rate BTL mortgages feature a uniform value of interest rate over the entire term of the loan. This is perhaps the most common buy to let mortgage type used in the UK. Fixed rate BTL mortgages allow both the lender and the borrower to keep a tight control over the numbers, regardless of the prevalent market situation.
Tracker Rate BTL Mortgages
Tracker loans feature variable interest rates. These rates are typically a function of the Bank of England Base Rate. Tracker mortgages, for the initial months of repayment, allow for lower interest rates than fixed rate mortgages. However, in volatile market conditions, it’s advisable to go with a fixed rate in order to plan the repayment with more certainty.
Interest Only BTL Mortgages vs Repayment BTL Mortgages
Most landlords who choose to take a buy to let loan do not intend to own the property beyond the tenure of the mortgage. Therefore, ‘interest only’ buy to let mortgages are more common in the UK.
An interest only buy to let loan requires the borrower to only pay the monthly interest over the tenure of the loan. The principal loan amount is repaid at the end of the loan term by selling the property. On the other hand, a repayment buy to let loan requires the borrower to repay the principal as well as the interest monthly. This results into much higher monthly repayments. The borrower outright owns the property upon successful repayment.
Buy to Let Mortgage – FAQs
What is a buy-to-let mortgage?
A buy-to-let mortgage, often written “BTL mortgage”, is a loan used to purchase a property that you will rent out and not live in yourself. Unlike a residential mortgage, lenders focus on the property’s rental income rather than your personal salary.
How much deposit do I need?
Most buy-to-let mortgages require a deposit of 20–25%. Some lenders may ask for more depending on the property type and your financial profile and these factors affect the overall risk to the lenders.
How is affordability assessed for a BTL mortgage?
BTL mortgages work differently to residential mortgages. For BTL mortgages, the lenders base the affordability on the projected rental income the property will generate, rather than your personal income. Typically, the rent must cover 125% to 145% of the monthly mortgage cost, depending on the interest rate being applied.
Can I get a buy-to-let mortgage as a first-time buyer?
Yes, it is certainly possible, but the options are more limited. Most lenders prefer applicants who already own a home, though some will consider first-time buyers with strong finances and credit profile. Best speak to a specialist Buy to Let Mortgage Broker for best advice and range of options.
Are these mortgages interest-only or repayment?
Most buy-t0-let mortgages are interest-only – therefore you only pay the interest each month and repay the full loan amount at the end of the mortgage term. Repayment options are also available. Interest-only mortgages are typically much more affordable than repayments since no capital sum is being repaid each month.
What are the main risks of buy-to-let mortgages?
Risks include property value fluctuations, tenant vacancies (voids) and changes in interest rates or tax laws. It’s always important to allow for these risks when planning your BTL investment.
Can I get a mortgage with a limited company?
Yes absolutely! Many UK landlords now use limited companies for maximum tax efficiency with buy-to-let mortgages. Not all lenders offer this, but specialist options are available – speak to an experienced BTL Mortgage Broker to discover what all the options are and the benefits of each.
Can I live in a property with a BTL mortgage?
No. Buy-to-let mortgages are strictly for rental properties purposes only. Living in the property would breach the mortgage terms and can risk the mortgage lender cancelling the mortgage so should never be done under any circumstances.
Can I remortgage my current property to a buy-to-let?
Yes absolutely! If you’re moving out and want to dedicate your property to rental purposes, you can switch your residential to a buy-to-let mortgage. This is known as a let-to-buy mortgage and requires evidence of the new property you are either buying or renting.
How can a mortgage broker help me?
A btl mortgage broker can access deals across the whole market – including lenders that don’t deal directly with the public, so can offer you the widest choice and secure best deals for you. Additionally, a good mortgage broker will guide you through the process from start to finish.
Don’t Get Stuck with a Buy to Let Mortgage You Don’t Deserve!
Having closely watched the letting industry for years, we can’t stress enough how important it is for landlords to choose nothing but the best buy to let mortgage offer. An unfair BTL mortgage deal can see you paying hundreds, if not thousands, of pounds that you didn’t have to. Commercial Finance Network, being one of the most experienced whole of market brokers in the UK, has all the expertise and the resources it takes to help you avoid this fate and maximise your rental income.
In response to client demand, we have now established a specialist division for our Buy-to-Let and Residential clients – UK Mortgage Broker who have a dedicated team of Mortgage Advisors focusing purely on these niche markets.
Get in touch today to speak to one of our BTL Mortgage Brokers and find out how we can help your project take off successfully!