Am I eligible?
To be considered for a buy-to-let mortgage, you will have to meet certain criteria. These will vary from lender to lender, but usually the mortgage conditions state that you should:
- Have an annual salary of over £25,000
- Already own and live in your own property
- Be under a certain age (typically 70 or 75) when the mortgage is due to be paid off.
There may also be conditions attached to what type of property you can purchase with a buy-to-let mortgage – for example, the property may have to be located in the UK.
How it works
Buying to let is in some ways as simple as it sounds: you buy a property, then rent it out and make a profit. However, there are some important points to consider:
- Unlike residential mortgages, most buy-to-let mortgages are not regulated by the Financial Conduct Authority (FCA), because they are classed as an investment property loan rather than a consumer loan.
- You can choose between an interest-only repayment plan, where your monthly repayments only cover the interest on the loan, or a repayment mortgage, where you pay back both the interest and part of the loan itself each month.
- If you already have a buy-to-let property portfolio, you will have to submit the financial details of each property before being considered for a new mortgage.
Fees and taxes
Buying a property and renting it out to tenants is very different to getting a mortgage for your own home. You’ll have to take into account the following:
- The mortgage fees and interest rates associated with buy-to-let are higher.
- You may have to pay a larger proportion of the property’s value as a deposit.
- You will be liable for Capital Gains Tax if your property makes a big enough profit.
Take a look at our Mortgage Calculator to work out your monthly payment, just click on the button below:Mortgage Calculator
As a landlord, you will need to meet certain legal requirements when renting out your property. It’s important to understand what’s involved before committing.
- Rental properties must be rated at E or above in an Energy Performance Certificate.
- Under new Right to Rent legislation, you are legally required to check that your tenants are entitled to live in the UK.
- Some local councils require landlords to be licensed.
Finding the right buy-to-let mortgage
Not all mortgages are the same, so it pays to shop around. Here are some things to consider:
- Are you looking for a fixed-rate or a variable-rate mortgage for your property?
- What are the terms and conditions attached to the loan? Your lender may dictate what type of tenants you can take on, or place restrictions on the type of property you can invest in.
- If you have only a small deposit saved, you may have to pay more interest on your mortgage.