Buy to Let

  • Up to 75% purchase price
  • Higher the deposit lower the rate
  • Borrowing based on rental income only.
  • Rental multiples from 100% – 120%
  • Fixed and tracker rates
  • Exclusive products
  • Adverse credit

Buy to let (BTL) mortgages are for those looking to invest in property. With the turmoil in the mortgage market this could be a sound investment for the future. The restriction in the number of mortgages available and continuos rise in house prices have priced out many from the property ladder, therefore the demand for rental property has risen dramatically as more look to rent rather than to buy.

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The lending on a buy to let is assessed in two ways:

  1. Rental income
  2. Your income
  • Rental income – The calculation varies for different lenders. There are mainly two ways.
  • Straight forward- rent needs to be 125% of monthly mortgage payments, on interest only basis.
    Example: Property value = £200,000; Loan= £150,000 (75%); Mortgage interest=4%. The monthly mortgage then = £500.
    The rent needs to be at least 125% of £500 = £625 per month
  • Default interest rate- rent needs to be 125% of monthly mortgage payments based on a specific interest rate set by lender; on interest only basis.
    Example: Property value = £200,000; Loan= £150,000 (75%); Mortgage default interest=5.25%. The monthly mortgage = £500, The Monthly mortgage for rental calculation= £656.25.
    So the rent needs to be at least 125% of £656.25 = £820.31 per month

 

 

  • Your income – Two types of lenders.
  • Those requiring a minimum earned income (excluding rental) e.g. £25,000 or £50,000
  • No minimum income, but some level of reasonable income (shown on bank statements).

Our guides to the mortgage process

Lender Search
Best Buy Tables
Mortgage Handbook

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