If you are interested in a buy-to-let mortgage, you should know that it is for landlords who are intending to purchase property and rent it out to other people. The rules that govern these types of mortgages are actually fairly similar to the rules that govern regular mortgages, but there are some major differences that you should keep in mind as well. Buy-to-let mortgages are for people who want to invest in flats or houses and are actually able to take some sort of risk financially. Investing in property is actually a fairly risky business, so you should not take out this type of mortgage if you cannot afford the risk. In addition, you should be a homeowner yourself, as you will actually struggle to get this type of mortgage if you do not own your own home. You need to have a good credit record and should not be too thinly stretched in terms of other borrowings. You should have as high of an income as possible, is the more money you make, the easier it will be to get a lender. You should also be under a certain age, as many lenders have upper age limits that are typically between ages 70 and 75. This would actually be how old you need to be at the end of the mortgage, rather than the beginning – meaning you should take the length of the mortgage and subtract it from the upper age limit to make sure you are young enough to be able to take out that particular mortgage.
You should be aware that the interest rates on these buy-to-let mortgages are typically higher than those on ordinary mortgages, and the fees are typically a great deal higher as well. The minimum deposit for these types of mortgages is typically about 25 percent of the value of the property, so it can actually be between 20 and 40 percent. Typically, these mortgages are interest only, meaning you will not have to make monthly payments, but you will have to repay the capital in full at the end of the term. The maximum amount that you will be able to borrow will be connected to the amount of rental income you are expecting to receive from the property. Typically, the rental income will need to be at least 25 to 30 percent higher than your mortgage payment will be.
You will usually be able to get a buy-to-let mortgage from a big bank or a specialist lender. However, it is always a good idea to talk to a mortgage broker before taking out one of these mortgages, as they can actually help you find the deal that will be best for you. You should make sure that you have all the information before you make a final decision, and that your decision is an educated one rather than one that is made on impulse or without all of the necessary information. Considering what a huge commitment this is, you should be sure to be as careful as possible going into it.