These types of mortgages are designed for property investors and private landlords, who do not intend to live in the purchased property.
Buy to let mortgages are a way for existing investors and new landlords to take their first steps into the rental property market. This is how it normally work:
Put down your deposit: The minimum deposit for a buy to let mortgage is typically higher than a standard residential mortgage. You will usually need at least a 20% deposit and a larger deposit will get you a better rate.
Interest-only payments: With buy-to-let mortgages, you still have the option for a capital repayment or an interest-only mortgage but mostly Landlords tend to pick an interest-only mortgage, because it reduces your monthly payments significantly, allowing you to maximise your rental earnings potential so you’ll pay the interest each month, but not the full capital amount. At the end of the mortgage term you’ll repay the capital debt.
Your rental income usually must be at least 125%-145% of your mortgage payment – this is called your rental yield.
Some lenders also require a minimum income, sometimes of at least £25,000.
Lenders may look at the property price, some will only lend if the home is worth more than £40,000 and demand for the type of property and how many properties you own to see your track record.
There are often minimum age requirements of 18, with some lenders requiring you to be at least 25 to be eligible for a loan.
A fixed rate deal can offer you peace of mind, as you’ll know what your monthly repayments will be but there are other options available which could work out cheaper overall.
Be mindful of other costs associated with Buy to let mortgages such as letting agency fees, landlord insurance, maintaining your property, cleaning and redecorating your property and legal and accountancy fees.
A poor credit history can make it difficult to obtain a mortgage but there are some lenders that are more flexible.
If you rent out your residential property on a residential mortgage then you will be breaching your mortgage contract. Your mortgage lender could repossess your home or make you repay the mortgage in full.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Commercial buy to lets are not regulated by the Financial Conduct Authority (FCA).
Some buy to let mortgages are not regulated by the Financial Conduct Authority (FCA).
Edge Mortgages Ltd T/A Edge Mortgages (FCA No 988131) is an Appointed Representative of Connect IFA Ltd (FCA No. 441505) which is Authorised and Regulated by the Financial Conduct Authority and is entered on the financial services register (https://register.fca.org.uk/) under reference 922009. The FCA does not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies. The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
Edge Mortgages Ltd Registered Address is Office 1494, 58 Peregrine Road. Hainault. Ilford. IG6 3SZ. Company is Registered in England and Wales Reg. 14469065. Edge Mortgages Ltd is registered with the Information Commissioner’s Office under registration reference: ZB443111. Copyright © 2021 All Rights Reserved.
A fee will be payable for arranging your mortgage with Edge Mortgages Ltd. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity, but this is typically £500 for our services. Initial consultation is always free.
A fee of (£0 – £199) may be payable at the outset when you apply for the mortgage which will be discussed and agreed with you at the earliest opportunity.
We don’t charge any fee for insurance services.
Commission disclosure: We are a credit broker and not a lender. We have access to an extensive range of lenders. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive commission from them after completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and product. The lenders we work with pay commission at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
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Your home may be repossessed if you do not keep up repayments on your mortgage or loans secured on it.
Edge Mortgages Ltd T/A Edge Mortgages(FCA No 988131) is an Appointed Representative of Connect IFA Ltd (FCA No. 441505) which is Authorised and Regulated by the Financial Conduct Authority and is entered on the financial services register(register.fca.org.uk) under reference 922009.
