Advice for buy to let mortgages

If you are looking at buying a property for investment purposes in Croydon then this advice may be useful for you.

Most lenders will not let you rent a property to tenants using a residential mortgage so you will need a buy to let mortgage instead.

What is the difference between a residential and buy to let mortgage?

There are a few differences when you are looking to get a buy to let mortgage. To begin with, the interest rates are generally higher. This is because lenders feel there is more of a risk for meeting the repayments when you rent a property to tenants.

Lenders will usually also expect you to have at least a 25% deposit. Some lenders may require as much as a 40% deposit! A residential mortgage deposit can usually be as low as 5% so buy to lets are much higher.

Usually you will also have a residential mortgage before you consider a buy to let.

As always, lenders will look at the following when you apply.

  • Employment status (full or part time, employed or self employed etc.)
  • Affordability (how much do you earn and can you afford the repayments?)
  • Your age
  • Your credit score
  • Any debts you may have such as finance or credit cards
  • Property type
  • Average rental income on the property in question (Buy To Let)
  • Plus more

Every lender is different and their requirements may change. This means that if you do not suit the criteria of one lender, you may suit another. Be aware though, if their requirements change then the interest rates may change too. You may end up paying more (or less) than if you went with a different mortgage deal. This is why a qualified mortgage broker in Croydon can be useful!

How much income do I need for a buy to let mortgage?

Most lenders will require an income of at least £25,000 per year . Lenders will also check any existing debts and credit cards, as detailed above. They may also check your monthly outgoings to ensure you can make all the monthly repayments.

Can you get tax relief on a buy to let?

Before 2017, the interest paid on a buy to let mortgage was tax deductible. This is now slowly being phased out. From April 2020 mortgage interest will no longer be deductible at all.

Talk to a mortgage broker for first time buyer mortgage advice

Now you know the basics, talk to me today to ask any questions. I’ll be able to compare the whole of the mortgage market and find a product which should best suit your needs.

Feel free to use the form below, or get in touch via my contact page.