A mortgage is basically a loan secured upon an asset. Most mortgages are loans granted to home buyers to buy a house or flat and in most cases the mortgage is the single largest financial liability that most will take on during their lives.
A Buy to Let mortgage is a loan which, as the name suggests, is lent to the buyer of a residential property for the purposes of investment rather than personal occupation. Both loans are used to buy houses or flats but the Buy to Let mortgage is different in some subtle but important ways.
Buying to let is a popular and potentially lucrative way to invest your cash. It is potentially lucrative because it offers you several benefits over the simple investment bond or building society account. There is potential for capital growth and rental income.
Because a Buy to Let mortgage is a loan on a property investment, the lender is likely to want to take into account several additional factors to those expected when buying your home for personal occupation. A lender will want to be sure that if you borrow from them, you are earning enough to pay the mortgage payments.
With a Buy to Let mortgage the mortgage adviser will look at your own income and expenses, but also at the rental income the investment is likely to produce. They will have criteria including Loan to Value, which we have explained elsewhere on our blog, but they are likely to also set maximum ratios of monthly rent vs monthly mortgage repayment. They will look at net rental income (after management costs, Buy to Let House Insurance, etc) and they will want to make sure that if interest rates rise, you are still able to pay the mortgage even if rents remain static.
Of course, the lender is keen to lend money. That is their business. However, they need their money back too and it’s not in the lender’s (the mortgagee’s) interest to hold a lot of risky loans with a poor return. This is why they have other lending criteria for Buy to Let mortgages and in many cases this is why borrowing for your own home is cheaper than borrowing more money for a second property investment. Lender’s need to know what you are buying - and why they are lending you money before they quote you terms.
For more information or to borrow on the best terms contact us for an informal and friendly chat.
Call 01628 507477 or email us here: team@mortgagerequired.com for more information.
Related Blog post: Why do People Buy to Let?
Download our Free First Time Buyers Guide
Recent posts
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
9 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
14 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
The Family-Backed Mortgage from NatWest
17 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
The Impact of Klarna on Mortgage Applications
18 days ago
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
Buy to Let mortgages: what's happening?
23 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
14 Apr 2025
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
14 Apr 2025
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
More information
Trusted by
