Buy To Let Mortgages
Buy to let mortgages are given to property landlords, who are buying with the sole intention of letting out the property for additional income. The income generated from rental agreements becomes part of your annual income alongside any wages, or additional income you might have.
You may decide to apply for a buy to let mortgage for just one or two personal properties – or you may decide to setup a LTD company to begin building a property portfolio. At JWD Mortgages, our mortgage brokers have extensive knowledge and access to the very best solutions, to help buy to let property owners perform at the very best rental yields possible. We work closely with tax advisers and specialist lenders to provide you a whole suite of services.
N.B Not all Buy to Let mortgages are regulated by the Financial Conduct Authority
Buy To Let Mortgage FAQs
What is a buy to let mortgage?
Buy-to-let mortgages are for property purchases made with the intention of renting out for additional income. This specific mortgage allows you to rent out an entire property, or rooms in a property, with the protection of landlord insurance. Buy-to-let mortgages come with typically higher interest rates, as banks and lenders see rental agreements as more high risk than owner occupier agreements.
Can I change to a Buy to Let mortgage?
Changing your mortgage from a standard purchase to a buy to let will depend on your mortgage provider. Your mortgage broker will be able to check your existing lenders criteria and the policy in place. However the good news is converting a current residential property into a rental one can be done with the right approval. Speak to our mortgage advisor for advice if you’re thinking about renting out a property.
Why are Buy To Let mortgages more expensive?
As well as the higher risk around repayments, the lenders need to cover their own insurance and the underwriting risk associated with renting out your property.
How much deposit do you need for a buy to let mortgage?
To secure a buy to let mortgage, you will generally need a 25% deposit against the property price. However, some 15-20% solutions exist depending on the market’s health. The deposit you require will depend on your specific case details and the property type.
Do you need additional income for a buy to let mortgage?
Before considering a buy to let mortgage you should be financially prepared to cover any potential “rental voids”. These occur when no tenants occupy the property and no rental income is being generated. As a landlord you are still responsible for the mortgage payment, so should be financially capable of paying your mortgage without the additional income.
Lenders realise these risks which is why some minimum incomes exist. Typically £25,000 or a figure based on potential rental voids. Every lender is slightly different and some offer no minimum income requirements.
What is the criteria for a buy to let mortgage?
There are so many criteria to consider that we can only recommend speaking to an experienced mortgage broker. We’re here to help you secure the best deal on your mortgage agreement and maximise the potential income of renting out a property.
Can I rent out my house without telling my mortgage lender?
If you’re considering renting out your property on a residential mortgage, you must consult your lender before doing so. Your mortgage lender can assign you a ‘consent for lease’ which is the permission you need to start charging rent.
As a property owner you will always require your lenders permission until you are the principal owner of a property with a signed mortgage contract confirming this. Renting out your property without consent from your lender will almost definitely infringe the legal conditions of your mortgage contract.
It’s worth knowing that banks and lenders actively seek for rental properties that are listed on the market without rental agreements or permission.
What happens to my existing mortgage if I rent my house?
If you are able to obtain “consent to let” from your current lender your mortgage can stay the same. Otherwise, a new buy to let mortgage needs sourcing & arranging.
Start earning additional income with a buy to let mortgage
Whether you’re an experienced homeowner or a first time buyer, the idea of earning rental income has probably crossed your mind. Buy to let mortgages are designed to support both landlords and tenants, by levelling the standards set across the rental market. Anyone is eligible to apply for a buy to let mortgage, but every lender will have their own criteria in place. What was previously an elite buyers club, has become a far more accessible form of income for many. Modern buy to let mortgages are designed to make it easier for property owners to earn rental income, while regulating the property market for those unable to purchase.
The UK government have shaped buy to let mortgages since the 19080’s by introducing legislations usually as part of budget announcements. Over the last decade these have involved changing tax relief, implementing stamp duty, amending underwriting standards and more.
If you currently own a property in the UK or are looking to invest in a rental property, our mortgage brokers can help you explore the lender market and calculate the true cost of earning rental income.