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  • Writer's pictureAaron Wilkes - Mortgage & Protection Adviser

Buy to Let

Updated: Apr 18, 2023

If you're looking to invest in property, a buy to let mortgage could be the perfect solution. Buy to let mortgages are designed specifically for investors who want to purchase a property to rent out to tenants. In this blog, we'll take a closer look at what buy to let mortgages are, how they work and some key things to consider before taking one out.

What Are Buy to Let Mortgages?

A buy to let mortgage is a mortgage specifically designed for people who want to buy a property to rent out to tenants. Unlike residential mortgages, which are intended for people who want to live in the property they're purchasing, buy to let mortgages are intended for landlords who want to rent out their property to generate income.

How Do Buy to Let Mortgages Work?

Buy to let mortgages work in much the same way as residential mortgages. The main difference is that the lender will take into consideration the potential rental income from the property when deciding whether to approve the mortgage and how much to lend. This means that lenders will typically require a higher deposit for buy to let mortgages and interest rates are typically higher than residential mortgages.

When applying for a buy to let mortgage, you'll need to provide evidence of your rental income, such as a tenancy agreement or rental history. Lenders will also take into account your personal income and credit history, as well a the value of the property you're purchasing and the potential rental income.

Things to consider before taking out a buy to let mortgage are:

  1. Rental Yield: Before taking out a buy to let mortgage, it's important to carefully consider the potential rental yield.

  2. Location: Location is key when it comes to buy to let properties. You'll want to choose and area where demand for rental properties is high and where rental income is likely to be stable or increasing over time.

  3. Costs: In addition to mortgage repayments, you'll need to factor in other costs, such as maintenance, repairs, insurance and management fees. Make sure you have a clear understanding of all the costs involved before taking out a buy to let mortgage.

  4. Risk: investing in property is not without risk and it's important to be aware of the potential pitfalls before taking out a buy to let mortgage. For example, you may struggle to find tenants, or the property may require significant repairs or renovations that eat into your profits.

In conclusion, buy to let mortgages can be a great way to generate income from your property but they're not without risk. Before taking out a buy to let mortgage, i's important to carefully consider rental yield, location, costs and risks involved. With the right research and preparation, however, a buy to let mortgage could be a smart investment that generates income for years to come. Our Advisers can advise you on the different types of buy to let mortgages.


Some buy to let mortgages are not regulated by the Financial Conduct Authority

Approved by The Openwork Partnership on 18/04/2023

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