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A buy-to-let (BTL) mortgage is a loan for purchasing or remortgaging a property which is let to tenants, and not lived in by the borrower. Buy to let mortgage interest rates and fees are typically higher than standard residential mortgage.

You will also generally need a larger deposit to purchase a BTL property – at the minimum you will need 15% deposit (i.e. you can borrow up to 85% loan to value), and ideally larger to access the best deals for buy to let. A good number of mortgage lenders also restrict the LTV to 75%, which means that to find the best BTL deals you will need a deposit of 25%.

At Your Mortgage Experts you will speak to a specialist mortgage broker that will be able to recommend the most suitable options for your buy to let mortgage in London and eslewhere in the UK, and find out the best mortgage options that you can qualify for.

A buy to let mortgage is largely assessed on the property’s profitability, i.e. the rent generated vs. the cost of the property (mortgage monthly payment, other property costs). So it is important that you have a credible estimate for the rent that you can achieve from the property.

Most buy to let lenders require the property to be self-financing (i.e. the rental income would need to cover the mortgage monthly payment and other property related costs). However, there are other lenders that will look at the affordability including your earned income

Most lenders will also generally cap the maximum loan amount to 75% of the value of the property (i.e. 75% loan-to-value or LTV). Some lenders will be prepared to lend up to 85% LTV, however these mortgages will be more expensive, and the rent may not be sufficient to cover the mortgage monthly payment and the other costs. As a general principle, please bear in mind that the higher the LTV, the more expensive the mortgage product will be.

Buy-to-let mortgage rates are generally higher than residential mortgages. However, there are plenty of competitive deals on the market. It is good to know that with a large deposit, you will be able to access the cheapest mortgage deals. The best rates are available with deposits of 40% or more.

The smallest deposit you can get a buy-to-let mortgage with is 15 %, although your choice of products will be very limited and more expensive. A deposit of 25% or above is more typical and it will let you access a much broader range of mortgage lenders and products.

Yes, funds that you may be able to raise from an existing property can be used towards the deposit for a new property purchase. The ability to raise funds will largely depend on two factors: (1) how much equity you have left in the property, and (2) the affordability assessment. Providing you meet those tests, you will be able to get money “out” of a property, to use for a further property purchase.

If you plan to move home and want to keep your current home to rent it out, and raise money from it, you may be able to do so. This is also called let-to-buy. You can get a let-to-buy mortgage providing that there is sufficient equity in your existing home, and that you satisfy the lender’s criteria.

If you do not plan to raise any funds from your existing home, but simply want to rent it out, you may still need a buy to let mortgage.

Alternatively, you may ask your current exiting residential mortgage lender for their consent to let, which might involve switching your mortgage to a buy to let rate – however, not all lenders will allow this.

Alternatively, you can remortgage to a different lender on a buy to let deal. If you plan to stick with your current lender, you must inform them that you intend to rent out your home.

If you own a property or intend to purchase a buy-to-let property through a limited company, you will need a buy-to-let mortgage specifically designed for limited companies.

Limited companies BTL mortgages work in a similar manner as standard BTL mortgages. Their main differences is that the product rates for Ltd Co BTL tend to be higher than for standard BTL mortgages; but on the other hands, the stress test requirements (i.e. affordability  acceptable criteria) tend to be more favourable than standard BTKL mortgages.

Owning a BTL property in a limited company, rather than in personal name, could be more tax-efficient and better for Inheritance Tax purposes.

A House-in-multiple-occupation (HMO) is where the landlord lets out the property to a group of tenants who are not part of the same family or household.

HMO mortgages tend to be more expensive than standard BTL mortgages. The assessment of an HMO mortgage is fairly standard in terms of rental income stress test requirements. However, not all BTL mortgage lenders are willing to pend to such properties, therefore the product offering can be a little more limited.

Typically, the landlord will require a licence from the Local Council in order to let out an HMO, as there are specific requirements setting out the maximum number of tenants, and more stringent responsibilities in relation to health and safety and fire safety requirements.

The local authority will typically issue an HMO licence valid for five years, and they charge a fee for issuing it. The licence must be renewed before it runs out, if you will continue to run the property as an HMO.

You can apply for an HMO licence by postcode using the link below, where you can also find out more information by clicking here.

Please note that by clicking on the link above you will leave Your Mortgage Experts’ website.  Your Mortgage Experts has no control or responsibility for the pages you are about to access, or to where any subsequent links may take you.

A portfolio landlord is someone that owns 4 or more rental properties. A portfolio landlord that wants a BTL mortgage or BTL remortgage will be subject to some specific lending criteria such as rental cover requirements and portfolio stress test.

In simple terms this means that the overall profitability of the buy to let property portfolio is taken into account, when assessing a BTL mortgage. Each lender can apply slightly different rules to portfolio landlords and may have specific thresholds for their acceptance criteria, such as maximum number of mortgaged properties in the portfolio, maximum portfolio LTV, and so on.

The tax regime on BTL has changed in recent years, and it is likely to continue to change overtime. There are several taxes that you should be aware as follows:

• The rental income is liable to income tax; for limited company BTL it is generally possible to offset the loan interest against some of the rental income when calculating the taxable income.
• The disposal of the property may be subject to capital gains tax.

You should seek appropriate tax advice from a qualified accountant on the taxation of letting a property.

If you purchase a buy to let property or a second home, you will need to pay stamp duty land tax (SDLT). Typically, the stamp duty land tax rate on an investment property or on a second home is 3% higher than the SDLT rate payable on a standard residential property.

The amount of SDLT payable depends on the value of the property and where in the UK it is.

For the latest stamp duty rates, please refer to the calculator provided by HMRC – by clicking here.

Please note that by clicking on the link above you will leave Your Mortgage Experts’ website.  Your Mortgage Experts has no control or responsibility for the pages you are about to access, or to where any subsequent links may take you. 

Buy to let mortgages are generally taken as interest-only mortgages. This will help minimise the monthly mortgage payments. Providing that the mortgage is affordable, you could instead take out a repayment buy to let mortgage.

However, it is important that you realise:

• A Repayment mortgage is the only way to guarantee repayment of the loan at the end of the mortgage term and is the most cost effective method over the full term of the mortgage.
• If you intend to set up the mortgage on an Interest Only basis, the monthly payments are only repaying the interest on the money you have borrowed; at the end of the term you will be required to repay the full value of the loan.  In this case you should have a clear strategy for the repayment of the loan at outset, which could be the sale of the property. If you do not have sufficient funds to repay the outstanding balance at the end of the term the lender has the right to repossess and sell your property.

With an interest only mortgage, you also end up paying more interest overall as you are paying interest on the entire amount borrowed for the whole term. With a repayment mortgage you gradually pay the capital off, and interest is only charged on the amount of capital left each month.

The simple answer is “it depends”.

Landlord building insurance

It is a requirement of your mortgage agreement to have buildings cover in place. Depending on the type of property (freehold vs leasehold) you may need to take up insurance yourself, or ensure that the insurance is in place.

If you own a freehold property (e.g. a house), you will need to have your own landlord building insurance in place. If you own a leasehold property (e.g. a flat), you will need to make sure that the building has a building insurance in place.

Buildings insurance policy cover against fire, theft, flood and a several other risks should the unexpected happen.

Content insurance

You do not have to have a content insurance in place. However, you may wish to insure contents that you own – so if the property is furnished, for example, you may want to include an element of contents insurance cover. This can either be purchased as a standalone insurance policy, or added onto your buildings insurance.

Tenants are responsible for insuring their own content, and they can purchase tenants’ contents insurance as a standalone policy.

Rent guarantee and legal expenses insurance

This insurance is also optional for landlords, and it is taken if you want to have additional peace of mind.

If tenants fall into rental arrears, the rent guarantee and legal expenses insurance will not only pay for the rental arrears, ensuring that the landlord is not out of pocket, but it will also cover the legal expenses involved with evicting the tenant