Rental income
A lender’s rental assessment is not a promise that a tenant will pay that amount throughout the mortgage. Allow for periods without rent, missed payments and changes in demand when considering whether the commitment is manageable.
Buy-to-Let Mortgages
Understand the borrowing behind a rental property.
A buy-to-let mortgage is for a property you intend to rent to tenants rather than live in yourself. The lender will usually consider expected rental income, but your deposit, personal finances, experience and the property can also affect the options.
Rates, fees and deposit requirements can differ from residential mortgages. We’ll explain suitable borrowing from the lenders available to us, while you consider the running costs, responsibilities and risks of owning a rental property.
Look at the property and the wider commitment
Deposit and costs
A larger deposit is normally needed than for a residential mortgage. Keep money available for buying costs, maintenance and other landlord expenses too, rather than assuming that all available savings can go into the purchase deposit.
How you own it
Borrowing personally and through a limited company can have different lending, legal and tax implications. The right structure depends on your circumstances; a mortgage comparison does not replace advice from an accountant or solicitor.
Plan for more than the mortgage payment
Rental income needs to support a property with ongoing costs, not just a loan. Repairs, insurance, management and any applicable service charges or tax can reduce the amount left over. Consider how you would cover the mortgage if the property needed work or a tenancy ended before another tenant moved in.
The repayment method matters as well. With interest-only borrowing, paying the interest does not reduce the mortgage balance, so the capital still needs to be repaid. Check that the intended use, property type and tenancy are acceptable to the lender. Most buy-to-let mortgages are not FCA-regulated; consumer buy-to-let receives different regulatory treatment, which needs to be explained for the particular arrangement.
Your property may be repossessed if you do not keep up repayments on your mortgage. Most buy-to-let mortgages are not regulated by the Financial Conduct Authority.
How mortgage advice works
Talk about your plans
We’ll start with your circumstances and what you need from a mortgage, so we can explore the options available to you.
Compare suitable deals
We’ll compare suitable deals from the lenders available to us and explain the repayments, fees and other costs.
Make your application
If you decide to go ahead, we’ll guide you through your mortgage application and the information your lender needs.
Getting started
Can family members live in the property?
Tell your adviser who will occupy the property and whether you intend to live there yourself at any point. Occupation by you or a family member can change the type of mortgage and regulatory treatment. Do not assume an ordinary buy-to-let product permits every arrangement.
Is letting my existing home the same thing?
Not necessarily. If you want to retain your current home and buy another to live in, a Let to Buy arrangement may be relevant. Your current lender’s permission and the borrowing on both properties need to be considered before you start letting.
Is rental profit guaranteed?
No. Mortgage approval does not establish that a property will be profitable. Rent, running costs, interest rates and the property’s value can change. Assess the investment and obtain appropriate tax and legal advice as well as considering how it will be financed.
Your property may be repossessed if you do not keep up repayments on borrowing secured against it.
