Moneytree Wealth Management
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Buy to let

If you’re looking for something tangible to invest your money in, a rental property might be a good place to start.  And if you can’t afford to buy the property outright, you can finance it with a buy-to-let mortgage.

They work in much the same way as domestic mortgages, but often have higher interest rates. A bigger deposit is usually needed too. 

The affordability assessments you have to complete are different too. Lenders usually want the expected rental income from a property to equal 125% of the annual mortgage repayments (e.g. if your mortgage payments were £10,000, you’d have to bring in £12,500 in rental income). They’ll assess this alongside all the other application checks.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Are there any rules around buy-to-let mortgages?

To be considered for a buy-to-let mortgage, you’ll need to:

  • Often be aged 21
  • Earn £25,000 minimum per year.

Buy-to-let mortgages are usually either fixed rate or tracker:

  • Fixed rate

Your monthly mortgage payments stay the same for a pre-determined length of time. They’re good if you like knowing your payments won’t shoot up if interest rates rise.

  • Tracker

The mortgage will track a base rate - usually the Bank of England (BoE) base rate. Tracker rates can be for an introductory period (typically anything from one year to five years), or you can get a lifetime tracker, which means that you'll be
on it for the whole term of your mortgage.

Typically landlords choose interest only, meaning repayments are cheaper, but you have to rely on selling the property to clear the capital part of the mortgage. You can offset some of the mortgage interest against tax (you’d be classed as a self-employed landlord and would have to fill in an annual tax return).

To talk to us about buy-to-let mortgages, simply complete the pop-up form on the right-hand side of this page. If you prefer, you can give us a call on 01244 47010  or send us an email to: .

Some Buy to Lets are not regulated by the Financial Conduct Authority

Tax treatments varies according to individual circumstances and is subject to change.

Your home may be repossessed if you don’t keep up with repayments on your mortgage.

Amy Smith

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