Mortgage specialist, Richard Lester from Apr Money Limited offers a guide on buy to let mortgages:
The purchase of a property for the purpose of renting out with the aim to make a profit through rental income and capital growth.
Buy to let mortgages are a type of semi-commercial mortgage, designed to provide investors with the means to purchase property for letting and long term capital gain.
The types of products are similar to residential mortgages, with fixed and tracker rate products available. Interest only is more common but buy to let mortgages are available on a repayment basis too.
Although buy to let lending is generally based on personal income, a certain level of earned income is required. The amount of mortgage is usually justified by a calculation around the rent received, compared to a notional rate of interest designed to safe guard against future rate rises. The loan is multiplied by a rate of interest typically 5.25%, and then a margin of 25 to 40% is applied. The annual potential rental income needs to at least match this figure for the loan to be agreed. Some lenders can be more forgiving, applying lower rate or lower margins, therefore it is worth getting advice before applying.
Typically at least 25%, although some specialist lenders may consider less.
John German work closely with Apr Money Limited to provide independent mortgage advice. Apr help many investors build successful property portfolios, so whether this is your first time purchasing a buy to let or you are adding to your rental portfolio we’ll put you in touch with them for expert advice.
Find out more on property investment read more…
Date Posted
May 4, 2019
Article Category
Author
Katy Storer
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