What Is A Buy To Let Mortgage
What Is A Buy To Let Mortgage? | The First Time Landlords Guide
What is a buy to let mortgage? The short answer to that question is that it is a mortgage used to buy a property with the intention of renting it out. However, there is much more to the question of what is a buy to let mortgage. On the question of what is a buy to let mortgage, it is important to know that not every buy to let mortgage is the same. Indeed, there is just as much variety within the BTL mortgage sector as within other mortgage sectors.
So when thinking about a buy to let mortgage, it is important to consider this variety. Mortgage lenders may badge their buy to let mortgages in different ways, calling them anything from buy to let mortgages to property investment loans to investment property finance. However, it all comes down to borrowing money to buy a property which you plan to rent out.
The consideration of buy-to-let mortgages is complicated by other ways of financing a BTL property investment. One of those is let to buy, where people let their existing home and borrow money to buy a new one that they intend to live in. This is also considered part of the BTL sector.
Property Investment Questions
So, if you're looking to invest in property for the first time, what is a buy to let mortgage lender going to ask you? First of all a BTL mortgage lender will want to know whether you can afford to make mortgage repayments. First time landlords are often expected to have a job or some provable source of income. And what is a buy to let mortgage provider going to ask you if you are not a novice to the field? Whether you're experienced or a novice, a BTL mortgage provider will be interested in how much you plan to rent your property for. In particular, the lender will want to know the rental cover. Your rental income should exceed your mortgage payments by something like 125 per cent, though the figure will vary with each lender.
And what is a buy to let mortgage holder to expect in terms of loan to value? Again, this varies according to the BTL mortgage provider. Where loan to values for buy to let were once around the 75 per cent mark, many deals are now available with loan to value ratios of around 80 to 83 per cent.
In addition to loan to value and rental cover, what is a buy to let mortgage borrower to do to manage the property efficiently. Many first time landlords will find that mortgage providers insist that professional letting agents are used to manage the rented property. This reduces vacant periods, ensures legal compliance and make sure that rents are in line with the rest of the market. These areas have to be covered whether professionals are used or not, and new landlords might find it better to take some advice. And if they need more information they can always ask a broker about what is a buy to let mortgage and how best to manage it.
