100% buy to let mortgages

A buy to let mortgage is a specific loan for landlords or investors who want to purchase a property to rent to someone else. A standard buy to let mortgage is for a single-occupancy house or flat. There are specific types of mortgage for other types of rental property, including houses of multiple occupancy (HMO) or a multi-unit blocks (MUB). You can also get holiday let mortgages and products specifically for limited company buy to lets.

A buy to let mortgage is used to purchase a property that will be rented to a third party. A residential mortgage is for a property you plan to occupy.

A buy to let mortgage is different as the property is seen as an investment, rather than a place to live. It is similar to a residential mortgage in that you will need to meet certain criteria, and you will have to pay a deposit, but you won’t be able to live in the property yourself.

If you rent out a property where the mortgage is intended for the owner to live in it, this will likely breach the terms and conditions of the mortgage. This is unless you have “consent to let”, a temporary contractual arrangement with your lender to rent your property.

Buy to let mortgages are for anyone who wants to purchase a property they plan to rent to someone else.

These could be first-time property owners or seasoned investors. We can help landlords with portfolios of all shapes and sizes, to find the right buy to let mortgage product for them.

Some landlords buy properties through limited companies. There are specific buy to let products for this type of lending.

The minimum deposit for a buy to let from our lenders is currently 15%. This means the maximum borrowing amount is 85% of the property value. This is subject to change.

Generally speaking, the more money you can put into a deposit, the greater the range of buy to let mortgage rates you will have access to. This is because if the borrower takes on more financial risk, it reduces the risk to the lender.

As a rule, no. You will need a specific buy to let mortgage to purchase a property if you plan to rent it out.

Regulated, residential mortgages are not suitable if your sole aim is to rent out your property. Most lenders will have clauses against this in their terms.

If you find yourself an “accidental landlord” (e.g. if you have been unsuccessful at selling your home and rent it out, while it is on the market, to try and recover some costs; you inherit a property, or your job role requires you to move temporarily and you do not wish to sell your home) you will need to notify your lender about the change in your circumstances.

They may give you a Consent to Let, which allows you to continue your current mortgage while renting out your property. However, they may request that you switch to a buy to let product, which we can help you with.

Anyone could potentially buy a property and rent it out. However, each mortgage lender will have its own specific lending eligibility criteria. You will need to meet these criteria before you can be approved for their products.

You will likely be eligible for a buy to let mortgage if you meet the following:

• You are at least 18 years old
• You can meet the minimum deposit requirements
• You can meet the lender's rental requirements (usually that the rent from the property is 125%-145% of the mortgage payments)
• You must not have been made bankrupt in the last 12 months
• You must not have been in, or discharged from, an Individual Voluntary Arrangement (IVA) in the last 12 months
• You must not be in, or have settled, a debt management plan in the last 12 months
• Your tenants must not be family members
• • Your property meets the minimum required Energy Performance Certificate (EPC) rating for rental property

Some lenders may have additional requirements such as your minimum personal income or a limit on the maximum age that you can be to get a mortgage. However, if this is the case, our advisors can work with you to find specialist products that require no minimum income or have no upper age limits.

A buy to let mortgage is money from a lender, either a bank or building society, which you use to purchase a property to rent out. You will then be responsible for paying back the money on either an interest-only or capital repayment structure for the loan term.

Interest-only buy to let mortgages only require you to pay the interest (a sum of money the lender charges for borrowing money from them). At the end of the term, you will still owe the lender the lump sum you borrowed.

You either need to pay back the lump sum from another source, remortgage the property or sell the property to cover the capital cost.

Capital repayment mortgages mean that alongside the interest on the loan, you will be paying off the lump sum you borrowed. You will end up owning the property at the end of the loan term.

Yes. You can get a buy to let mortgage as a first time buyer (you have never owned a property of any sort), or as a first time landlord (you own your own home but have never rented out property).

You can borrow up to 85% of the property loan to value for a buy to let mortgage. You will need to have a 15% deposit. If you do not have 15% in cash, you may be able to borrow against other property you own.

Unlike residential mortgages, which are often calculated on your salary, buy to let mortgages typically use the rental income to determine the loan. The only exception is for landlords who are first time buyers, where personal income is taken into account.

Some lenders require you to meet a minimum personal income, to make sure that you can cover the monthly payments if the property isn’t let for a period of time.

However, we also have access to lenders who do not take salary into consideration. So, if you are self-employed, or drawing a pension or for any other reason have a low personal income, don't worry, you may still be able to get a buy to let mortgage.

Lenders just want to see that you have some sort of personal income, in case of voids or issues collecting rent, but not all of them require it to be a given amount.

If you have literally no income whatsoever, for example because you are between jobs or being supported by a partner, it may be harder to get a mortgage, but not necessarily impossible.

Some of the restrictions on a buy to let mortgage include not occupying the property yourself, and not renting to family.

This is because buy to let mortgages are intended to be ‘self-funding’ – i.e. the mortgage payments are covered by the rent. If you are both the borrower and the rent payer, it is not a self-funding scenario. Where a mortgage is not self-funding, the Financial Conduct Authority requires greater protection for the borrower.

If a tenant is a family member, and was unable to pay the rent, then a new tenant may need to be found. This can pose a conflict of interest, as there are emotional reasons why you would not want to ask a family member to leave the property. This heightens the risk of the debt being unpaid, placing you as the borrower in a vulnerable position, a risk the lender naturally wants to guard against.

This is why, if you are occupying the property yourself, you would need a residential mortgage. To rent to an immediate family member, you will need a regulated buy to let mortgage.

Yes. If you plan to move out of your current residential property and want to rent it out, you can switch to a buy to let mortgage.

Switching to a buy to let mortgage enables you to rent out a property you used to live in. This falls under an industry known definition of “consumer buy to let”.

If you are planning on remortgaging your current property to release equity to buy a new residential property, this is process is called “let to buy”. You can then use the released equity for the deposit on your new home.

There should not be a limit on how many buy to let mortgages you can have. One thing to consider is that some lenders will have different rates for what they consider "portfolio" landlords. This is usually landlords with 4 or more properties but the definition itself varies between lenders as well.

Some lenders may also restrict the amount you borrow from them in total, regardless of how many properties the funding is used for. While others may place a restriction on how many properties they will lend against. This is all down to specific lender requirements and can be discussed with a mortgage advisor.

Buy to let mortgage advice is different from financial advice. Mortgage advice is designed to help you identify the right product from across the market, once you have made the decision to invest in property. Financial advice is likely to be a step before this, where you seek professional help to decide how you want to invest, or what type of investments you would like to make.

It is important to be confident in your decision to invest in a rental property, you may or may not decide to take financial advice.

Another important piece of advice to consider when investing in property is tax advice. This again is a specialist subject and something that falls outside of buy to let mortgage advice. Tax advice may influence whether you choose to buy a property as an individual, or through a limited company.

Once you have reached a decision on investing in property, your buy to let mortgage advisor can do the rest; saving you time by making a thorough search of the mortgage space, to find you a suitable product.

Your buy to let mortgage advisor will ask you about your experience in property, the property you want finance for and a few other details that a lender will ask on a mortgage application. By asking you these details, you get buy to let mortgage advice that is tailored very specifically to you, your security property, your investment plans and your financial circumstances.

The risk of not getting all this information is that some aspect of the application, presented to a lender, may fall outside their criteria. This can waste time and money, especially if a valuation has been conducted to assess your property.