Buy to Let Mortgage

British landlords are fortunate in that the UK buy to let mortgage marketing is probably the most innovative and competitive in the world. This means there’s a very broad offering of buy to let mortgage products available on the market at any one time.

With so many products available, there is scope for landlords to feel slightly overwhelmed and that’s why we offer free access to a buy to let mortgage calculator. Using this will ensure that you make all your property investment decisions based on financial facts rather than on emotional decisions.

What is a buy to let mortgage?

What makes a buy to let mortgage different from a standard mortgage, is that it is used for purchasing property that you want to let to tenants. Investing in buy to let offers landlords a source of income in addition to a long-term investment in property. Further details can be found on the Money Advice Service.

Are there different types of buy to let mortgages?

There is a variety of buy to let mortgage loans in the UK. The most common ones include:

  • Variable rate buy to let mortgage
  • Fixed rate buy to let mortgage – a fixed rate is given to you for a set period of time or until a given date
  • Discount buy to let mortgage – for a period of time the rate is reduced until returning to the standard variable rate
  • Tracker buy to let mortgage – these mortgages track a recognised key mortgage rate such as LIBOR (London Inter Bank Office Rate)
  • Minimum status buy to let mortgage
  • Self-certified buy to let mortgage
  • Non-resident buy to let mortgage
  • UK limited company buy to let mortgage

Which buy to let mortgage should you choose?

The buy to let mortgage product that will suit you will depend upon what your circumstances are. It will also depend on what your personal attitude is with regards to risk.

If you would like financial security you may be better suited to a fixed rate buy to let mortgage. If interest rates rise, then they can rest assured that they will be paying a set payment each month and won’t have to find extra money to cover your mortgage no matter what happens with the rates.

A slightly riskier approach would be to opt for a discounted buy to let mortgage. You would then be able to make lower than normal buy to let mortgage payments if the interest rate rises. This arrangement would be a temporary arrangement, so you would need to be very wary of this approach to ensure that you can manage the situation in the long term when the discounted agreement comes to an end.

For less risk, you may find the more affordable variable rate or tracker could be more feasible. This method does not require the landlord to pay out extra for a soft start or for any insulation against rate rises.

Tips for getting the best deal

To give you further guidance on how to choose the best product, here are some points to consider:

  1. Do your homework. Although buy to let can bring some great financial benefits, it’s also something that has risks with it. It’s important you understand the potential returns in addition to risks. There are resources on the web which you can use to make the most informed and educated decisions. You might want to start with our buy to let mortgage calculator.
  2. Choose the right location. The “right” location isn’t so much about price, it’s about demand. Find out where there are jobs available, good transport links, schools and shops for your ideal tenants.
  3. Know your target market. Who are your potential tenants? You need to understand their persona, what they might be looking for in a property and a location. Students would prefer a particular requirement, whereas a young professional may prefer another style. A young family may already have furniture so will not need a furnished property.
  4. Identify the risks involved. There are risks you should be aware of when investing in the buy to let property market. House prices can go up and they can go down. In some cases, properties can remain without tenants for a period of time. A buy to let landlord will typically plan for their property to be empty for two months in every year. There will also be repairs to make and there may even be accidental damage. You will need to have the money to cater to these needs.
  5. Play to your strengths. The big advantage is that you are not part of a chain, this can put you into a position of having a better card to play when negotiating a mortgage with a lender.

Buy to let mortgages can offer landlords a gateway to an income as long as they are selected with care.