A buy-to-let mortgage is a loan secured on a property where the property is let out to a non-family member in return for rental income, which is usually payable by the tenant per month. The affordability is usually calculated by carrying out a stress test using the expected rental. These mortgages will generally require more of a deposit than a residential mortgage.
You have the option of purchasing a property in your personal name or under a LTD company. When you are purchasing in your personal name, the rates will generally be lower because more lenders will lend in personal names so there is more competition in the market. You will find a lot of the high street lenders will do BTL’s in personal names and not under a company. The downfall is the affordability calculation. On a LTD company BTL, the stress testing used will usually be either the same or better, depending on the lender.
On a BTL property, it is far more flexible to get your mortgage on an interest-only basis because you can use the sale of the BTL property as the repayment vehicle. It depends on what outcome you are after. You will receive rent each month from your tenant, which will then go towards your monthly mortgage payments. If you are on interest-only, you will make more income per month, but the balance on the mortgage is never reduced. If you are paying capital and interest, your mortgage will be repaid at the end of the term. The only issue is you will not be making much income per month.
If you would like to know more give us a call on 07720601196 or contact us below.
Your home may be repossessed if you do not keep up repayments on your mortgage. Not all Buy to Let Mortgages are regulated by the Financial Conduct Authority.
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