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 must 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. However, rental properties tend to be cheaper than many others.

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:

  • Be aged 25 or over.
  • 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 lender will set your mortgage at a rate above the Bank of England (BoE) base rate and your payments move up or down accordingly for the lifetime of the mortgage.

They’ll also be 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 470 107 or send us an email to: info@moneytreewm.co.uk.

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

Haleam Muhashash

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