Just like a residential mortgage, buyers put up a deposit and a mortgage lender or provider will provide the remaining amount to allow the buyer to purchase the property in question. The buyer then pays the mortgage provider back the amount borrowed, plus interest, over an agreed term.
Most mortgage providers will lend up to 75% of the value of a property for buy-to-let mortgages. This is slightly lower than the 70-90% they will lend up to for a residential mortgage simply because the loan is considered more risky if the buyer is already paying off another mortgage because they may be less likely to be able to finish repaying the mortgage. This does mean that you need to put down a bigger deposit and you’ll likely have to pay a higher interest rate than on a residential mortgage, as well.
As with residential mortgages, you will need to provide proof of income to show that you will be able to pay back the amount borrowed. Many mortgage lenders may specify a minimum income and some will require you to be over 25 years of age. There may also be a cap on the amount you can borrow and the number of buy-to-let mortgages you can take out so you will need to speak to your mortgage provider about what restrictions may apply in your case.
When you’re looking for buy-to-let mortgages, comparison software can be helpful, but quotes aren’t always identical. Make sure that all options you compare offer the same interest rates and extras so that you know the comparison is accurate and fair.
If you’d like to talk about your requirements and find out what deposit you would need and what interest rates you might be liable to, give us a call and we’ll be happy to talk through your options for buy-to-let mortgages.
To find out more about buy-to-let mortgage insurance, get in touch with our friendly team today who would be happy to talk through your requirements and help you to decide whether buy-to-let mortgage insurance is right for you.
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