Buy To Let Mortgages
If you’re planning on buying a property and letting it out to tenants rather than living in it yourself, then you’re going to need a special type of finance known as a buy to let mortgages.
Buy to let mortgages are seen as more of a business transaction for landlords rather than traditional property purchases which are lived in by the owners.
They’re a great way for people to turn property purchases into investments, but there are a few hoops you’ll need to jump through to get approved.
Let’s take a closer look at buy to let mortgages, if you’re eligible and what steps you can take to get a great deal.
How Do Buy To Let Mortgages Work?
As with traditional mortgages, you’ll still be borrowing a lump sum which is repaid, with interest, over a fixed number of month or years. However, you’ll find that the fees are likely to be higher to put off property investors from taking on properties which can be left uninhabited.
The interest rates are also higher since in most cases the mortgage will be paid from the rental of the property. This can put financial pressure on repayments should tenants be unable to make rent or if the property cannot be filled for a longer period of time.
Finally, it’s well worth knowing that most buy to let mortgages are offered on an interest only basis. Whilst this rule doesn’t apply to everyone, it will keep your repayments lower but mean that entire balance needs to be cleared in chunks or when the property is sold.
Am I Eligible For Buy To Let Mortgages?
Buy to let mortgages are a complex form of borrowing and as such there are some basic criteria that you’ll need to be aware of, including:
- Being in a position to take a risk as investments can go up as well as down
- Having a good credit record and can comfortably afford the repayments
- Earning £25,000+ per year (although some lenders do stretch below this)
- Being within the age limits as set out by each buy to let mortgage lender
Of course, each of the buy to let mortgages will have their own assessment methods so it will vary from lender to lender, but it’s well worth making sure you have the above in place before applying.