FAQs

A Buy to Let (BTL) mortgage is a type of loan designed for those looking to purchase a property to rent out. Unlike residential mortgages, BTL mortgages are usually interest-only, meaning you only pay the interest each month, while the capital (the amount borrowed) remains outstanding. At the end of the mortgage term, you’ll need to repay the full loan amount, which can typically be done by selling the property or refinancing.

These mortgages are often taken out by landlords and property investors, and lenders assess applications based on the expected rental income rather than just personal income. However, affordability checks and minimum income requirements still apply.

BTL mortgages come in different types, and choosing the right one depends on your financial situation and investment strategy. These include:

• Fixed Rate Mortgages – The interest rate remains the same for a set period, providing certainty over repayments.
• Tracker Mortgages – The interest rate follows the Bank of England base rate, meaning payments can fluctuate.
• Discount Rate Mortgages – A variable-rate mortgage offering a discount on the lender’s standard variable rate (SVR) for a set period.
• Capped Rate Mortgages – A variable mortgage where the interest rate won’t go above a certain limit.
• Offset Mortgages – Your savings are linked to your mortgage, reducing the interest you pay.

As experienced Buy to Let mortgage brokers, we can help you navigate the options and find the most suitable deal for your circumstances.

Lenders determine how much you can borrow based on your expected rental income rather than just your personal salary. They typically require rental income to be at least 125% to 145% of the monthly mortgage payment to ensure you can cover costs, even if interest rates rise. Some lenders may also take your personal income into account, particularly if you’re a first-time landlord.

Aside from your deposit and monthly repayments, there are other costs to consider when investing in rental property. These may include:

• Mortgage arrangement fees – Some lenders charge upfront fees for setting up the mortgage.
• Valuation fees – The lender will need to assess the property’s value before approving your loan.
• Legal fees – You’ll need a solicitor or conveyancer to handle the legal aspects of the purchase.
• Stamp Duty – Buy to Let properties incur higher Stamp Duty charges than residential homes.
• Maintenance and repairs – Keeping your property in good condition ensures it remains attractive to tenants.
• Letting agent fees – If you use an agent to manage your property, they will take a percentage of the rent.

We help landlords budget for these costs and ensure their investment is financially viable.

Most Buy to Let mortgages are interest-only, meaning that at the end of the term, you still owe the full amount borrowed. It’s essential to have a repayment strategy in place to settle the debt when the time comes. Common repayment strategies include:

• Selling the property – Many landlords plan to sell the property and use the proceeds to pay off the loan.
• Remortgaging – Some investors choose to refinance onto a new mortgage to extend the loan term.
• Using savings or investments – If you have other assets, you may choose to repay the mortgage using personal funds.

Having a clear exit plan is crucial to avoid financial strain when the mortgage term ends. We can help you assess your options and find the best long-term strategy for your investment.