Getting lending for a buy-to-let can differ from a standard residential mortgage. In this blog post, we address how a buy-to-let mortgage may include a higher deposit, different lending criteria and what a broker may look at when considering lending.
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Please see below the full transcript of the video:
Hi, welcome to Ask Johnsy, a series of videos that delve into the life of an investment consultant. Please hit the subscribe button below so that you’ll be informed of all future videos in this series. Let’s look at today’s question, which is:
“What is a buy-to-let mortgage?” – Sally, Bacup
Well, a buy to let mortgage is different from your standard mortgage. There’s different lenders, that specialise in buy-to-let property, but they generally focus on slightly different criteria. The main one’s the lending criteria that normally comes from the actual property itself and the rent that it generates. So, does that rent cover your mortgage payments and some more to give you a profit? Also, the deposit that you’re going to use that you’re going to put down, is going to be higher. So, you’re going to be looking at a 25% deposit at least, probably in some cases 30-35% deposit to buy your buy-to-let property. Of course, unless you’re buying it in cash, of course, that’s always one consideration.
As well as the main lending criteria, they will also look at or some lenders will look at your own personal status. But generally speaking, they’ll focus mainly on the property. Also, the fees are very, very different with these mortgages. They can be added to the mortgage, but then again, you’re going to be paying interest on those fees. Check your early repayment charges and make sure they don’t conflict with your exit strategy, or what your exit strategy might be in the future. Give yourself that flexibility of being able to do what you want with your property.
Finally, don’t assume that you’re just going to be able to get a buy-to-let mortgage. A lot of it’s out of your hands. You know, a lot of it relates to the property, the valuation, the lender’s criteria, the lender’s criteria at that particular time which could change. Speak to an FCA regulated IFA, that’s very, very important. Thank you.
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