If you want to become a landlord and start earning a rental income, then one of the first steps to do is to acquire a rental property. If you already own a property that you want to let out, then you’re already one step closer – but you aren’t ready just yet.

If that rental property still has a mortgage, for example, then you need to first switch to a buy to let mortgage.

The same applies if you want to buy a property specifically to rent out.

While there are many similarities between a residential mortgage and a buy to let mortgage, there are a few differences in how you get one. This guide will cover how to get a buy to let mortgage from start to finish:

Buy to let mortgages explained

A Buy to Let (BTL) mortgage is a special type of mortgage that’s primarily used to buy a property specifically to rent out. You can also switch your residential unit to a BTL mortgage, though you may prefer a let to buy mortgage instead in this case.

A BTL mortgage lets you rent out your original residential property and buy a new residential property. If you don’t intend to buy again, however, then switching to a BTL works fine.

How to get a buy to let mortgage

To get a buy to let mortgage, you’ll need to follow these steps:

1. Research the market: Find where it is best to buy a rental property, what average rents are, etc. Make sure you pay attention to future developments. A new tube line, for example, can skyrocket property values. Buying early, then, may be worthwhile for you.
2. Prepare your finances: You will need to save a higher deposit (usually between 25 to 40%). You will also need to be able to cover maintenance costs, repair costs, renovation costs, and void periods. Having a healthy savings account can help you secure a loan.
3. Get a mortgage or agreement in principle: Go to a broker to see what lender offers are available to you, then get a mortgage in principle.
4. Make an offer on a property: With a mortgage in principle, you can then start house hunting. When you find one that suits your goals, put an offer in.
5. Make a mortgage application: The next step is to go back and make an official mortgage application. This might be with the lender you have a mortgage in agreement with, or it might not.
6. Carry out valuations and surveys: Both you and your lender should then perform surveys and valuations. Your lender will do this to check that the LTV is within a suitable range. You need to do it to understand the issues with the home and if they’re severe enough to renegotiate your offer.
7. Receive your official mortgage offer: With all the necessary documents, including rental market information, the lender you put in an application for will send you an official offer.
8. Sign and complete: Once everything is in order, all that’s left is to sign the agreement and go through the conveyancing process. Once the legal checks are done, the funds are released, and you own the property.
9. Sign up for additional services: Now is the time to consider investments such as landlord insurance or property management.
10. Getting licenses: If you want to rent out your property to three or more unrelated tenants, you’ll need an HMO license from the council, so make an application ASAP.

How much is a buy to let mortgage?

A buy to let mortgage is usually more expensive than a traditional residential mortgage. You’ll need to account for these costs:

1. Higher interest rates
2. Legal and conveyancing fees
3. Valuation fees
4. The higher stamp duty
5. Maintenance costs
6. Void periods

How much deposit for a buy to let mortgage?

Most BTL lenders will only offer a mortgage that covers 75% less of the property’s value. This means that you need a 25% deposit or more. This higher deposit reduces your repayments, making it easier to make a positive return on your rental income – so long as your property is consistently rented out.

Convert mortgage to buy to let step-by-step

Changing a buy to let mortgage is usually a much simpler process than buying a new property to rent out. The more of your property you own outright, the easier it’ll be to make the switch.

Remember, you don’t need to convert to anything if you own the property outright.

Frequently asked questions

Can I change my mortgage to buy to let?

Yes, you can change your mortgage to a BTL one. You can often do this by switching mortgages with your existing lender. If your lender refuses, then you will need to see if you can remortgage with a new lender.

Are there fees if I remortgage to a buy to let?

There might not be fees if you switch with the same lender, but this depends on the individual lender. You will need to pay fees to remortgage to a new lender.

How do I get a buy to let mortgage if I have bad credit?

It is possible to get a BTL mortgage with bad credit. What you will need instead is a much higher deposit, and possibly a guarantor.

How many buy to let mortgages can I have?

You can have as many BTL mortgages as you can afford. Some landlords have dozens of BTL mortgages, while others just have the one.