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Buy to Let Mortgage
Buy to let mortgage's are becoming increasingly popular as a means of investment for all types of people both in the UK and around the world. This is mainly due to the security associated with property and the fact that they will usually go up in value over time. Their popularity is in part due to the transparency of the investment, that is to say that people generally know how much they owe on a property and what the property is worth and subsequently how much equity they have in the buy to let property.
If you are wanting to purchase a buy to let mortgage or if you currently have a buy to let property you want to remortgage, our specialist mortgage brokers are on hand to help.
There are various things to consider when buying a property
What are Buy to let mortgages
Buy to let mortgages are designed for borrowers who intend to let the property out to tenants and are offered on a slightly different basis than a normal residential mortgage. Buy to let mortgages are becoming more common as a means of investment than ever before as people look to other avenues as a way to secure their financial future. We specialise in none standard mortgages such as Buy to Let, adverse credit, self certification and let to buy.
When considering to purchase a buy to let its important to consider not only the mortgage costs but also the rental income your perspective property may yield, the main difference from a lenders perspective when underwriting 
a mortgage application for a Buy to Let property is the rental yield, so much so that mortgage products can differ depending on the rental yield a mortgage will allow and rental income a property may generate.
How are Buy to Let mortgage payments funded?
Buy to let mortgage's are funded by the monthly rental of the property - they are intended to be paid for by tenants. If you are buying a new property, the lenders valuer will put a rental valuation on the property as well as a normal bricks and mortgage valuation and this will allow the lender to see if the potential rental yield generated will be enough to cover the mortgage payments.
You should be careful to ensure that the rental potential of a buy to let property is realistically achievable and will cover the monthly buy to let mortgage payments and allow additional funds to accumulate which should be set aside to cover any property maintenance and any times when the property doesn't have a tenant paying rent - if the property isn't being rented the mortgage will still need to be repaid. There are letting agents who will be able to ensure the property is let out as much as possible and will try to ensure the property is never vacant but they will charge a monthly letting fee, this monthly letting fee should also be covered by the monthly rental payments - if the rental payments on a buy to let property do not cover any of the points made above you may want to consider how the buy to let is being funded - to see if there are less expensive deals available and/or whether it would be better to look for a potentially more profitable property or investment.
Buy to Let rental example
A typical example of how a buy to let rental property is funded and how the monthly rental payments would cover the mortgage costs could be seen as follows, a buy to let property with a monthly mortgage payment of £700, if the rental income for this was £700 then this would be a 100% rental yield. The majority of lenders want to see a rental income of between 110% and 125% (meaning the rental income should cover the mortgage payments by that amount). For a rental yield of 125% with a monthly mortgage payment of £700 a rental payment of £840 would be required.
Because of the way buy to let properties are funded they are classed as self cert mortgages which effectively means that, as long as the rental income meets the lenders criteria the new mortgage would be deemed affordable, as far as affordability issues are concerned. You also have to consider the implications of meeting the new mortgage payments should you be unable to rent it for any length of time, the mortgage payments will still need to be made even if you don't rent the property out.
I have found a buy to let property, what should I do next?
The first thing to do is to speak to a mortgage broker who deals in buy to let mortgage's to find out what deals are available. The mortgage broker, if they know what they are doing will be able to work out how much rental will be needed for the property to be mortgaged and ideally be able to advise on the preferred rental income (to cover such things as repairs and maintenance to the property). Once you know that, if you have not already asked - the estate agent or a local letting agent should be able to give you an estimated monthly rental income, if the property already has tenants then you would use the rent currently being paid. This will allow you to immediately determine if the property is worth pursuing.
If your a seasoned professional or new to the buy to let mortgage market we could help.
Simply fill in the form at the top of this page and we will call you back.
