At need-a-mortgage.co.uk, we support landlords, whether they own one property or multiple properties. We keep in touch with our buy-to-let landlords through regular calls or Zoom meetings, helping both new and experienced landlords find the best deals by understanding their strategies.

Do I Need a Buy-to-Let Mortgage?

If you plan to purchase a property to rent out for profit, you’ll need a Buy-to-Let (BTL) mortgage. It’s illegal to rent out a home with a standard residential mortgage without consent from your lender, but it is sometimes possible to convert your mortgage type.

How Do Buy-to-Let Mortgages Work?

Most Buy-to-Let mortgages are interest-only rather than repayment. Interest rates are higher than for standard mortgages, and you’ll need a minimum deposit of 25%. Note that you cannot live in a Buy-to-Let mortgaged property. Not all BTL mortgages are regulated by the Financial Conduct Authority (FCA), except for specific situations like renting to close family members or accidental landlords.

How Much Can You Borrow on a Buy-to-Let Mortgage?

Lenders calculate the loan based on the potential rental yield from your property, aiming for the rental yield to equal at least 125% of the monthly repayments. Personal income isn’t the main factor; instead, lenders focus on the property’s rental income potential. It’s wise to research local average rents for similar properties in the area.

Consider a Backup Plan for Repayment

If you choose an interest-only Buy-to-Let mortgage, plan how to pay off the final lump sum. Selling the rental property is a common strategy, but having savings or investments as a backup is crucial in case the property doesn’t sell quickly or decreases in value.

Tax Implications of a Buy-to-Let Property

Be aware of additional tax implications:

A 3% higher stamp duty on Buy-to-Let properties compared to residential ones.Income tax on rental income and profits from selling the property.Capital gains tax when selling the property.

Tax relief is available for property repairs, letting agent fees, and council tax, but the additional income will affect your overall tax band. Always seek advice from a tax specialist.

Where Can You Get a Buy-to-Let Mortgage?

Both high street lenders and specialist mortgage providers offer Buy-to-Let mortgages. Finding the right lender can be time-consuming and complex, especially for new landlords. Speaking to a mortgage adviser can provide valuable guidance and streamline the application process.

How Can Need-a-Mortgage.co.uk Help?

Using a mortgage adviser from need-a-mortgage.co.uk offers many benefits. We can guide you to lenders most likely to accept your application, save you time and stress with administrative tasks, and ensure you access the best mortgage deals available. Maximising profit from your Buy-to-Let property starts with obtaining the best mortgage deal.