Conditions for A Buy-to-Let Mortgage 

Important to know

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Even the most patient of saints get put off by the complexities of mortgages and their criteria. Sieving through endless documents searching for answers is not enthralling. So, we’ve tried to condense what we know into an easy-to-absorb Buy to Let mortgage blog. 

Buy-to-let can provide a source of steady income as well as capital appreciation. However, there are several taxes to take into consideration that can impact the value of your BTL investment. This article will explain the key points.  

If you’re thinking about a Buy to Let mortgage, here are some important things to keep in mind: 

Considering a Buy to Let mortgage? Here’s what you need to know. 

Buy to Let mortgages are best suited for those who: 

  • Prefer to invest in something more concrete, like property, than stock or shares 
  • Are prepared to accept the amount of time and energy that property management can take up against the potential ROI 
  • Understand, and are willing to take on, the risks involved with this type of venture. You may not always earn a profit so it’s important to go into this understanding that fully. 
  • Understand the risks of borrowing money. 
  • Know that property prices could increase or decrease. 
  • Be prepared to potentially tie up your money for a long time. 

Some other things that may affect your ability to secure a Buy to Let mortgage are: 

  • The size of your deposit: usually, a 25% deposit on the purchase price is necessary for an easy transition. If you have less than that, you probably won’t find many good offers 
  • Your age: most places require you to be at least 25 years old 
  • Your income: sources say that you should make around £25,000 yearly.  
  • Your history: They will also check your financial Background and credit score 

Let’s focus on the property, or properties, you want to invest in. You can’t just pick any old thing–there are restrictions, rules and regulations. That’s because lenders need to assess whether or not the property is a good investment before they give out a loan. So here we go… 

What properties are difficult to secure a Buy to Let mortgage on? 

Although many lenders will base their decisions on the whereabouts and state of the property, other limitations can come into effect. These comprise: 

  • Holiday residences: creditors will need to certify that the estate can generate consistent revenue instead of only during prime tourist season. 
  • Former local authority buildings: based on location, if it’s a flat, and how many other privately owned flats are in close proximity within this building 
  • Flats located above commercial businesses: often present various issues or complications to renters and aren’t popular amongst potential tenants. 
  • High-rise flats: Some lenders may be unsure about the number of floors in the flat and what amenities are available. 
  • New build flats: For any new building, some mortgage lenders might require a larger deposit. 

While these are some of the common issues you might come across with certain types of homes, that doesn’t necessarily mean you can’t get a Buy to Let mortgage for them. Talking to a professional broker and utilizing their expertise is a great way to learn about which lenders would be best to approach in your situation. At Your Mortgage Experts, we’re more than happy to help guide you through this process. 

What should you consider before taking out a Buy to Let mortgage? 

Some other things that may affect your ability to get a Buy to Let mortgage are: 

  • Location of residence: most lenders will require that all borrowers live in the UK. Expats often have trouble getting a Buy to Let mortgage as an investment while they’re away, and it can even be an issue when they’ve returned. The only lenders who approve such mortgages are the ones who see it as having no risk. 
  • Mortgage lenders will oftentimes not work with people who have had bad credit in the past, however, depending on the situation, some may be more lenient. This all boils down to how severe the issue was and when it occurred. 
  • Some people opt to take their Buy to Let mortgage through a limited company in order to benefit from the various tax benefits that come with being a company director. However, this approach leaves the business carrying all liability a detail which some lenders don’t Favour because of the perceived probability of something going wrong within a business. 

Get the latest updates and advice on Buy to Let mortgage conditions by visiting our Buy to Let Mortgage news archive and downloading our infographic.

Luca Bertolino

Mortgage Expert

Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.

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