Buy to let
mortgages

A buy to let mortgage is a loan secured on a residential property with the specific aim of letting it out to tenants.

Yes, you will need a buy to let mortgage in place to let out your property to tenants. If you’re letting out your property whilst on a residential mortgage without your lender’s consent, you may be in breach of your mortgage conditions. Get in touch with one of our expert brokers to discuss your options

The loan to value (LTV) is how much you are borrowing as a percentage against the value of the property in question. Typically speaking, landlords will secure buy to let mortgage rates at 75% LTV.

Your gross rental income is the total amount your tenant pays you to live in the property before subtracting any expenses. Your net rental income is your true earnings after you’ve accounted for any costs such as fees, running costs, or taxes. You can then work out the rental yield of your property by dividing your gross annual rental income by the property value and then multiplying it by 100. 

The ‘ICR’ is part of a lender’s affordability assessment and is frequently referred to as part of a lender’s RTI (rent to interest) calculation. Typically speaking, RTI calculations for a five-year fixed rate are set at 145% at ‘pay rate’ (the actual mortgage rate) for individual borrowers, and 125% for Limited Companies. This is because you pay a lower rate of tax through a Limited Company, so lenders underwrite the application knowing you can afford more than if you were borrowing in your own name. Please seek professional tax advice before making any property investment decisions.

Lenders use these RTI checks to assess how affordable a mortgage product is for your current circumstances and to ensure the rental income more than covers the monthly mortgage payments and any additional associated costs.  

Lenders typically prefer borrowers to put down a 25% deposit for a buy to let mortgage application. It’s possible to get a buy to let mortgage with a deposit of just 15%, however, there are very few products in this bracket, and the interest rate is likely to be more expensive. On the whole, rates become much more competitive when you can put down a deposit of 25% or more. 

A residential mortgage is a loan secured on a property for you to live in, whereas a buy to let mortgage is a loan secured on a property you let out or rent to tenants Buy to let mortgages tend to incur higher fees, and mortgage interest rates are typically higher as well, as they are more specialist mortgage products. 

Furthermore, buy to let is not a regulated industry, whereas residential mortgages are. As such, you only have access to the Financial Services Ombudsman and Financial Services Compensation Scheme when applying for a mortgage for your own home. This is because buy to let mortgages are considered to be business transactions, and therefore are not eligible for the FCA’s consumer regulations.  

Arrangement fees are the amount charged by a lender to set up the mortgage for you. This is typically due once the loan application is completed, however, most lenders allow this fee to be added to the loan. It’s worth bearing in mind that interest will be charged on the fee if you do decide to add it to the loan. 

The fee can be a percentage of the loan or a fixed amount. Some lenders may charge higher arrangement fees to bring down the interest rate. 

There are plenty of benefits to using a broker to secure your buy to let mortgage, here are just a few to consider: 

Full market choice

Working with a whole-of-market broker gives you access to all products available on the market. Your broker can review the whole market to find the best rate for your needs and advise you on your decision, giving you complete confidence in your choice and mortgage application. Having developed relationships with some of the key lenders in the market, we have access to exclusive or limited-edition product ranges, making us best placed to help you secure your next deal. 

Dealing with experienced professionals 

Working with an expert broker will alleviate a lot of the pressure and time that it typically takes to complete a mortgage application. Your broker will also be able to help you put together all your documentation and package the case to ensure your application has the best chance of being accepted first time. This will reduce the stress of getting everything together on your own and put you in the best position for your mortgage application. 

There are plenty of benefits to using a broker to secure your buy to let mortgage, here are just a few to consider:  

Full market choice

Working with a whole-of-market broker gives you access to all products available on the market. Your broker can review the whole market to find the best rate for your needs and advise you on your decision, giving you complete confidence in your choice and mortgage application. Having developed relationships with some of the key lenders in the market, we have access to exclusive or limited-edition product ranges, making us best placed to help you secure your next deal. 

Dealing with experienced professionals 

Working with an expert broker will alleviate a lot of the pressure and time that it typically takes to complete a mortgage application. Your broker will also be able to help you put together all your documentation and package the case to ensure your application has the best chance of being accepted first time. This will reduce the stress of getting everything together on your own and put you in the best position for your mortgage application. 

Mortgage market volatility 

The mortgage market is constantly changing. With lender criteria evolving and products being withdrawn with very little notice before being replaced, it’s our brokers job to ensure they stay on top of the latest activity and ensure that you are always presented with the best options. Our expert brokers will typically receive notice from a lender before a product is removed from the market, giving you more opportunity to submit your application and secure your deal. 

Invaluable advice and support

Your broker’s priority is making sure you get the best mortgage rate for your needs and ensuring you have a seamless mortgage application process. Not only will they review the best mortgage product options available to you, but they can also discuss any concerns or questions you may have relating to your individual needs (and highlight the risks). They can help you achieve your plans to grow your portfolio, and be there to support you when it comes to your next enquiry, ensuring a quick and stress free experience.

As a whole-of-market broker, we have access to all available mortgage deals on the intermediary market. Our expertise and experience also mean lenders will sometimes give us access to semi-exclusive product ranges that other brokers won’t be able to access. Our relationships with key decision makers, underwriters and senior managers at most lenders is just as valuable as getting you the best deal.