Buy-to-let explained
When purchasing a buy-to-let property you need to be aware you are going to need a minimum deposit of 20% to purchase a buy-to-let, if you require a mortgage. Buy-to-let mortgages are assessed by looking at the anticipated rental income from the property. So the lender generally needs to see that the rental income is going to cover the monthly mortgage payment by a set percentage between 125% to 175% depending on your circumstances and the lender’s criteria.
Most buy-to-let lenders will require that you’re a homeowner already and that you’re not a first time buyer. You can organise a buy-to-let mortgage on an interest only basis, or on a capital repayment basis. However, if you wish to
have a capital repayment buy-to-let mortgage, the lender will do a full affordability assessment, and look at your income and your outgoings as well as the anticipated rental income.
Buy-to-let – additional tax and family
If you already own a home when you purchase a buy-to-let property, then you are going to be subject to additional tax on top of the usual stamp duty or LBTT. Most lenders will not allow you to have a buy-to-let mortgage on a property if you intend to let that property to a relative. So, again, if that’s your specific circumstance, speak to a broker because you’re going to have to look at some other options.
Mortgage advice at Progeny
Our mortgage advice services can support you no matter what stage you are in your home owner journey. As an independent adviser, we have access to mortgage products from the most well known high street lenders and banks, and often to deals that are not available when you go direct. Please contact our team here.
