Are you thinking about getting a buy to let mortgage and require more information before you make a decision? At The Levels Financial, we offer a wide range of mortgage products to ensure you get the right service for your requirements. Whether you’re looking to buy your second home, remortgaging your home or looking to expand your investment properties with a buy to let mortgage, our team has the experience and industry knowledge to assist.
Below, we have compiled a list of our most frequently asked questions when it comes to buy to let mortgages.
- What Is A Buy To Let Mortgage?
- Who Can Apply For A Buy To Let Mortgage?
- How To Apply For A Buy To Let Mortgage
- How Much Can I Borrow On A Buy To Let Mortgage?
- How Many Buy To Let Mortgages Can I Take Out?
- Buy To Let Mortgages From The Levels Financial
What Is A Buy To Let Mortgage?
A buy to let mortgage, otherwise known as a BTL, is designed for those who want to purchase a property with the sole intention of renting it out. Most buy to let mortgages are interest only, meaning that the monthly replacements will only pay off the interest, not the amount owed on the mortgage, otherwise known as capital.
Instead, what often happens is that the capital is paid off in full at the end of the agreed term. This may differ depending on your lender. Buy to let mortgages are also slightly different compared to residential mortgages, with some of their key differences being:
- Higher fees
- Higher interest rates
- A higher minimum deposit, typically 25% of the property’s value
Who Can Apply For A Buy To Let Mortgage?
Most lenders see buy to let mortgages as slightly more ‘risky’ than a traditional residential mortgage. Because of this, it can be slightly more difficult to obtain one, and you have to meet certain requirements.
These may differ depending on the lender, but typically, people who meet the following criteria, will be able to apply for a buy to let mortgage:
- Some lenders require that you already own a home, either outright or with an outstanding mortgage.
- Good credit history and score (you can find out more about credit scores in our blog post, ‘What can affect your credit score’)
- Evidence of income which will be separate from rental earnings income. Typically, to apply for a buy to let mortgage, this separate income is typically, around £25,000 a year. If you earn less than £25,000 a year, you may struggle to buy to let mortgage approval from some lenders.
- You’re not 75 years old or older.
- You will need a minimum 25% deposit for a buy to let mortgage with a loan-to-value ratio of at least 75%
- Your rental income should cover 125% of your mortgage repayments and the amount you borrow will be based on the monthly rental you will likely be getting from your rental property.
If you’re unsure as to whether you fit these criteria, please contact our team and our knowledgeable advisors will be able to assist you further.
How To Apply For A Buy To Let Mortgage
When looking to apply for a buy to let mortgage, you will usually need a bigger deposit than what you would need for a residential property. Because of this, it can be more difficult to apply for a buy to let mortgage, although not impossible.
Like any mortgage, to apply for a buy to let mortgage you will need to provide a wide range of documents including:
- Proof of earnings
- Proof of address
- Proof of identity
- Proof of deposit
How Much Can I Borrow On A Buy To Let Mortgage?
Depending on your income and credit score, will depend on the maximum lenders will allow you to borrow. Lenders often look at how much rental income you could get from the property, which is what they will base how much they are willing to lend to you.
As a general rule of thumb, the more you can charge in rent the higher a loan you will be eligible for.
How Many Buy To Let Mortgages Can I Take Out?
Some lenders may put a limit on how many buy to let mortgages a person can take out. Typically, lenders will allow you to take out anything from four to ten buy to let mortgages. However, this can vary depending on your circumstances and lender.
Buy To Let Mortgages From The Levels Financial
At The Levels Financial, we have access to a range of mortgages and lenders, so we will always be able to work with you to find the right buy to let mortgage for you.
For more information or to find out how we can help you secure your mortgage, get in touch with our helpful team and book your free initial consultation by emailing us at admin@thelevelsfinaical.co.uk or calling us at 01458 772040.
Please Note:
- There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
- Your property may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
- The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
