Buy to Let Mortgages
While you may be looking to establish yourself as a property owner whose prime motive is to make money this way, you may also look at buy to let when:
- You are moving for a fixed term and intend to return to your main property at some point
- You are upsizing and are in a position to rent out rather than sell your current property
There are a number of buy to let mortgages on the market, which one is right for you will depend on your particular circumstances. Always consider the financial impact of letting out your existing property rather than selling it on. In some instances it can be more profitable to sell, whereas in some cases it may present a better opportunity for rental income.
How does a buy to let mortgage differ from other mortgages?
There are slightly different criteria to a buy to let mortgage than others, for instance:
- The amount you can borrow is linked to expected rental income from the property
- The minimum deposit required is typically higher than non-BTL mortgages, usually 25% although as little as 20% can be possible
- You may take out a buy to let mortgage either as an individual or as a company
- Unlike other mortgages, where interest-only is not generally encouraged, interest-only payments are more common with BTL mortgages, in order to minimise payments and maximise profit
Should I take out a buy to let mortgage as an individual or as a limited company?
Many landlords now take out buy to let mortgages as a company due to recent tax changes that made buy to let more expensive for individual landlords. This is especially appropriate where there are multiple properties owned and being rented out.
Whether an established landlord or a private individual looking to rent out a property for the first time, it’s important to assess the affordability of a buy to let mortgage and if you can whether uncertainties, such as gaps between tenancies, upkeep of property maintenance and so on.
Our brokers at Your Prosperity will be happy to talk through your circumstances and help you to decide what’s right for you.