Buy-to-Let Mortgage FAQS
- Matthew Gibbs
- Oct 7, 2024
- 3 min read
Updated: Apr 18
A Buy-to-Let Mortgage is one that allows you to borrow money against a property that is let out to tenants, or due to be let out. Learn more >
Buy-to-Let Mortgage FAQS
How much can I borrow with a Buy-to-Let Mortgage?
Buy-to-Let Mortgage lenders may lend up to 75/80% of a property’s value, the amount they can lend is based on the rental income of the property.
Can I have interest only on a Buy-to-Let Mortgage?
Yes. Most Buy-to-Let Mortgage lenders will allow you to take the mortgage out on an interest-only basis as it is classed as an investment. This does mean you will need to have a plan in place to repay the loan at the end of the mortgage term, also called a ‘repayment vehicle’.
How much deposit do I need for a Buy-to-Let Mortgage?
The minimum deposit required on a Buy-to-Let Mortgage is at least 20/25% of the property’s value. On top of that, you will also need to have funds to cover other costs, such as stamp duty and solicitor’s fees.
What’s the process to apply for a Buy-to-Let Mortgage?
As with a standard mortgage application, initially you will likely apply for an agreement in principle then complete a full application. Once you receive your mortgage offer, your chosen solicitor will look to progress and complete the transaction for you. Documents generally required include ID, bank statements, deposit proof and a tenancy agreement or proof of rental income.
Should I use a broker to apply for a Buy-to-Let Mortgage?
It depends on how difficult your personal circumstances are and how well you know the lender’s criteria! The process of applying for a Buy-to-Let Mortgage is similar to applying for a residential mortgage, but there are lots of extra things to think about before you get to that stage. For example, will the lender lend you enough based on the rental income? Will they accept the property type? Do they need a minimum personal income? If you are unsure, you should speak to a broker for some guidance as they will have the experience to find you the right lender, first time.
What fees will I need to pay when I apply for a Buy-to-Let Mortgage?
The lender may charge a valuation fee upfront although some products come with a free basic valuation. You may also be charged a lender arrangement fee, which, in most cases, can be added to the loan. Other fees, include your own legal fees, stamp duty and any tax liabilities you may have which relate to the investment property.
Can I convert my home to a Buy-to-Let Mortgage and buy a new home?
Also called a ‘Let-to-Buy’. This is usually acceptable with the right combination of lenders for both parts of the transaction. Some lenders will not be happy with this situation so it’s important you speak to both lenders before applying to make sure it fits with their criteria. A good mortgage broker will be able to give you some options for this scenario.
Can I remortgage my home to raise the capital for a Buy-to-Let Mortgage?
You may be able to remortgage your main residence to raise the capital for a deposit, if your existing lender and new Buy-to-Let Mortgage lender know the situation in full and it meets with their lending criteria.
What type of properties can a Buy-to-Let Mortgage be used on?
Buy-to-Let Mortgages can be used on most residential properties such as houses, flats etc although there are lots of types of properties that can be more difficult, such as studio flats, HMO’s, units on one freehold or ex-local authority properties. If the property you are buying or remortgaging is non-standard in any way, it’s worth checking with the lender first to see if it meets their list of acceptable property types.
Can I have a Buy-to-Let Mortgage if I’m a first-time buyer?
Yes, although it will be much more difficult as lenders would be looking to make sure that you aren’t buying a residential property that’s being masked as a buy-to-let. There are a few that many consider this scenario. First-time landlords can also be slightly harder to place, so if you haven’t got any letting experience, make sure you check the lenders criteria carefully.
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