Buy To Let Mortgages.
Buy to let mortgages are a specific type of mortgage that you must have if you wish to rent a property out. You cannot, under UK regulation, let a property out if you have a residential mortgage (unless you get permission from them first, of course).
Difference between Residential and Buy To Let Mortgages
One of the main differences between buy-to-let mortgages and residential mortgages comes down to regulation.
Buy-to-let mortgages, where you are letting a property for investment or business purposes are not regulated by the Financial Conduct Authority, meaning there is no protection from the Financial Services Compensation Scheme or Financial Ombudsman Scheme.
Why is this I hear you cry?
Well, it is viewed as a business venture and like all things in business, on your head be it if it all goes wrong.
Are they more expensive than residential mortgages?
The short answer is yes, slightly.
But not enough to get worked up or worry about. The positive of buy-to-let mortgages is that they can be accessed on an interest-only basis allowing you to invest over the long term and only pay the interest on the loan.
This means that you can benefit from the capital appreciation in the property over the long term whilst keeping your commitment low.
Buy-to-let mortgages are inherently more complex than residential mortgages. How much you can borrow depends on the rent received and lenders use various stress tests and methods for how much they will lend.
Navigating Buy To Let Mortgages
Portfolio landlords and limited company buy-to-lets also come with their own set of rules and if you are thinking about going down this route, the advice would be to chat it through with a qualified tax accountant in the first instance.
We have vast experience in the buy-to-let market and have solved the funding conundrum for many, many clients from first-time landlords to portfolio property magnates.
If you are after the best advice and mortgage for your rental property, get in touch and we will be happy to help.
Let's get started...
Enter your details below and we will be in touch.
