If you have hopes of becoming a landlord, then you’ve likely come across the concept of the buy to let mortgage and may be asking yourself what are buy to let mortgages, exactly, and if you even need one.
It is critical that you follow the letter of the law when you want to become a landlord. This means switching or getting a buy to let mortgage for your rental properties and following the latest and changing renter’s laws as it relates to landlords.
Don’t misstep and try to rent out a property without a buy-to-let agreement! This guide will cover exactly what a buy-to-let mortgage is, why and when you’ll need one, and what to expect when you try to switch or apply for a new buy to let mortgage for yourself.
What is a Buy to Let Mortgage UK?
What is a buy to let mortgage in the UK? It is a specific type of mortgage that lets you buy a new property specifically to rent it out. You can also switch your current residential mortgage to a rental buy to let one.
How do Buy to Let Mortgages Work?
A buy to let mortgage works similarly to a residential mortgage, but with a few key differences. We go into those differences in depth in our how does a buy to let mortgage work guide, so be sure to check it out.
Otherwise, know that a buy to let mortgage works by considering the potential rental yield. Lenders are unlikely to give you a mortgage unless the potential rental yield is at least 125% of your mortgage repayments.
If you own more of the property outright (meaning you put down a large deposit), then you’ll have smaller mortgage repayments, which in turn makes it easier to get a higher rental yield.
How To Get a Buy-to-Let Mortgage
Getting a buy-to-let mortgage is different from getting a standard residential mortgage. This is because you need to adhere to rental laws that dictate things like quality of property, health and safety, and so on. You also need to prove the property would be profitable for you. You can learn more about how to get a buy to let mortgage in our dedicated guide.
How Much Can You Borrow With a Buy to Let Mortgage?
How much you can borrow depends on:
- Your income and credit score
- The LTV of the property you want to buy
- How much rental income you can make
- Your experience as a landlord
We go into detail about how much you can borrow with a buy to let mortgage in another guide, so be sure to check it out.
Frequently Asked Questions
· What’s a BTL mortgage?
A BTL mortgage is a buy to let mortgage. BTL is just the abbreviation of “Buy to Let”.
· Do I need a buy to let mortgage to rent it out to my kids?
If your kids pay rent to you as a landlord, then yes, you need to switch your mortgage to a buy to let.
· Can I get more than one buy to let mortgage?
Yes, you can have as many mortgages as you can afford. If you’ve made headway paying off your last BTL mortgage and have a strong income stream from your rental, you can often get a subsequent buy to let mortgage to expand your rental portfolio.
· What is a let to buy mortgage?
A Let to Buy is another type of mortgage. With this mortgage, you essentially buy a new home that you can live in, and you rent out your existing property. Buy to let mortgages let you buy properties specifically to rent out or to transition an existing property to a rental. A let to buy lets you specifically buy a new home for yourself and rent out your old one.
