A buy to let mortgage is designed for landlords buying property that they will rent out to tenants. The rental income must be stated to the lender, because they will expect the rent to be used to make the mortgage repayments. Generally the rental income should be around 1.25 times greater than the monthly mortgage repayments for a lender to accept an application, although this varies from lender to lender. This means a valuation will be needed to assess the expected rental income. You may have to pay this charge but many lenders offer a valuation as part of the package.
The interest rates charged on buy to let mortgages are slightly higher than normal residential mortgage rates to account for a slightly more complicated and risky investment. The types of interest rates available are the same as with regular residential mortgages.
Why buy to let?
Buying to let is seen as a good investment for the future: You receive rental income that can be used to pay off the mortgage, then once the mortgage has been fully repaid you own a property that can be sold or used to generate more rental income. This is sometimes used as an alternative retirement income.
Now that buy to let mortgages are more common the market has become more competitive meaning there are some good deals available. This means there are a lot of different interest rates available and greater flexibility on repayments.
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