Buy to let mortgage
Buy to let mortgages explained
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If you are buying a property to rent, you will need a buy to let mortgage. Buy to let mortgages are very similar to residential mortgages, but with some key differences:
Buy to let mortgage deposit: Due to the increased risks involved with renting property, you will generally need a 25% deposit for a buy to let mortgage. It is however possible to get a mortgage with a 20% deposit and if you want to access the best buy to let mortgage rates, you will usually need 40% of the property purchase price.
Income: Most buy to let mortgage lenders will need you to receive between 125% and 145% of your monthly interest payments in rental income and earn a minimum £25,000 a year.
Age: With the average mortgage lasting approximately 25 years, many lenders have an upper age limit of either 70 or 75 years old. To stand the best chance of getting approved for a buy to let mortgage, you will therefore generally need to be 45 years or younger at application.
Read MoreWhen you invest in property there are a number of additional costs you will need to consider aside from your buy to let mortgage as follows:
Landlord letting agent fees: If you decide to use a letting agent to manage your property, you will need to pay them a fee to do so. They can carry out credit checks on perspective tenants, draw up contracts and chase any unpaid rent, which will usually cost you between 10 – 17% of your monthly rental income.
Stamp Duty Land Tax (SDLT): An extra 3% is charged on top of the standard stamp duty rates for all additional property purchases. From 8th July 2020 to 31st March 2021 the amount you will need to pay is as follows; 3% up to £500,000, 8% for the portion from £500,001 to £925,000 and 13% for the portion from £925,001 to £1.5 million
Capital Gains Tax (CGT): If you sell your buy to let property and the profit you make from the sale is more than £11,700, you will need to pay Capital Gains Tax. If the property is jointly owned, the threshold increases to £23,400 and you will have to pay either 18% or 28% tax, depending on your tax bracket.
Landlord insurance: Whilst it is not mandatory to have contents and liability cover, landlord insurance will protect your property and its contents, and also provide additional cover should a tenant or visitor die or sustain an injury whilst in your property.
Maintenance costs: As repairs to the property are your responsibility, you will need to set aside a budget for these.
Whether you are buying your first rental property or an experienced landlord looking to expand your portfolio, our buy to let mortgage brokers can help you find the best buy to let mortgage for your needs.
They will take the time to understand your financial goals and compare thousands of deals from the UK’s leading buy to let mortgage lenders, to find the perfect deal for you. When you are ready to apply for your new buy to let mortgage, they will also handle the entire process from start to finish to remove the stress and hassle from you.
If you are interested in exploring your mortgage options, simply get in touch or request a callback here and one of our expert advisors will contact you at a more suitable time.
Subject to status and lending criteria
If your applying on your own, leave the Applicant 2’s income blank
Exact borrowing amount will depend on your circumstances including but not limited to income, income source, dependents, age, credit history and commitments
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Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee payable for mortgage advice. This will typically be £399 but for more complex cases where there is significantly more work or expertise involved, we charge a fixed fee of £995. One of our advisers will detail fully how much we charge and when it is payable, before we proceed with an application on your behalf. Mortgage calculator based on a maximum of 5 times income. As with all insurance policies, conditions and exclusions will apply.
Fosters Financial LTD is an Appointed Representative of JLM Mortgage Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Registration numbers 743945 and 300629. Further details may be found by visiting www.fca.org.uk. Registered Office: 17 De Grey Square, Colchester, CO4 5YQ Registered Company Number: 09290950 Registered in England & Wales
