A Buy to Let mortgage is for the purchase of a property to be let and work in the same way as standard mortgages although the interest rates and arrangements can be higher than a residential mortgage. Fixed and tracker rate options are available and the mortgage can be arranged on interest only or a capital repayment basis.
The size of a buy to mortgage loan available is typically a maximum of 75% of the property value with some lenders offering 80% to experienced landlords. Unlike residential mortgage the amount you can borrow is not linked to your income, although a minimum level of income may be required, but is linked to the rental income that will be received as stated by a surveyor. The rental income usually has to equate to 25% to 45% higher than the monthly mortgage payments calculated on an interest only basis. The rate of interest used in the lender stress test will be higher than the actual rate of interest you will be paying to allow for possible rate rises.
If you are looking to purchase a buy to let property or remortgage an existing property or portfolio then get in touch and we can discuss the rates and lenders available.
Buy to Let properties can be purchased on an individual basis or by a Ltd company. It is important to seek advise from your accountant to ensure you purchase the property in the most tax efficient manner for your own circumstances.
In addition to the standard Land & Buildings Transaction tax (LBTT) on the purchase of the property a buy to let purchase would also and additional tax change under the Additional Dwelling Supplement rules. The additional dwelling supplement (ADS) is 4% of the purchase price of the property.