We are The Mortgage Pod, buy-to-let mortgage brokers
Buy-to-let properties can be a lucrative investment, even more so if you get the right mortgage deal. At the Mortgage Pod, our aim is to make getting a mortgage for a rental property as easy as possible. Our experienced team of mortgage advisers have years of experience in arranging buy-to-let mortgages for all kinds of property investors.
Whatever your reason for buying a rental property, for example, to provide retirement income, invest in holiday lets or grow your property portfolio, we can help you access the best buy-to-let mortgage deals available.
Our friendly and knowledgeable team will guide you through the entire mortgage process. We’ll help you understand the options available to you, calculate potential rental income and make sure you’re aware of the costs involved. We’ll even take care of the mortgage application so that you can concentrate on your responsibilities as a landlord.
For a stress-free buy-to-let mortgage application, get in touch with us today and get the ball rolling.
What is a buy-to-let mortgage?
A buy-to-let mortgage is a specific type of loan that allows borrowers to purchase a property specifically for the purpose of renting it out to tenants. This type of mortgage is often considered a long-term investment strategy as it can provide steady rental income and potential property value appreciation.
How do buy-to-let mortgages work?
A buy-to-let mortgage is generally considered high risk compared to a residential mortgage due to the dependency on rental income, which could impact the borrower’s ability to cover mortgage payments.
The increased risk is reflected in the terms of most buy-to-let mortgages, which typically require a minimum deposit of 15-25% deposit. Interest rates, costs and arrangement fees on buy-to-let mortgages are also higher than on residential mortgages.
Buy-to-let lenders base the loan amount on the expected rental income to ensure that the borrower can meet the monthly repayments. However, in some instances, lenders include surplus personal income to support the borrowing amount, known as “top slicing”.
A buy-to-let mortgage term is typically around 15-25 years, after which the outstanding amount is due (if any), often paid with the proceeds of the property sale. Both interest-only and repayment BTL mortgages are available.
Who is eligible for a buy-to-let mortgage?
This varies from lender to lender, but generally, the following criteria apply:
- You must be a UK resident.
- There is a minimum age of 21 years, and most lenders also have an upper age limit of around 70.
- As with all mortgage applications, you need to demonstrate a good credit history to reassure the lender that you will not defer on your mortgage payments. Check your credit report here
- The lender will make an assessment of your expected rental income against your monthly mortgage repayments. Typically, they require rental income to be at least 125% of your monthly payments.
- The minimum deposit required is typically 15% – 25% of the property value.
- Some lenders require evidence of a minimum income, typically around £25,000.
- The property must be in line with the lender’s criteria for suitable rental properties.
Can a limited company get a buy-to-let mortgage?
A limited company can take out a buy-to-let mortgage, providing it is set up in one of two ways:
- Special Purpose Vehicle (SPV) – This is a company that is created specifically to purchase, own or manage buy-to-let properties. A suitable company has a SIC code of 68100, 68201, 68209, or 68320. This can be checked on the Companies House register.
- Trading Company – This is likely to be an existing company that’s looking to invest in property or to add to a current portfolio of assets.
If you’re unsure whether to buy property in your own name or under your limited company name, we recommend that you speak to a suitably qualified tax adviser about the impact on Capital Gains Tax and Income Tax. Once you are confident about which route is best, The Mortgage Pod can step in and look for the best deals on your behalf.
Is an interest-only mortgage better than a repayment mortgage when it comes to BTL?
Like most decisions when it comes to buying a property or securing a mortgage, there are advantages and disadvantages to each option.
An interest-only mortgage will have lower monthly payments, potentially earning you a greater rental profit. However, you will never own the property outright. This is often considered a short-term investment opportunity where the aim is to generate income. It’s worth noting that the majority of lenders allow overpayments; therefore, the capital can still be repaid on your terms.
A repayment mortgage is often the choice for a longer-term investment strategy, with the aim of owning the property outright. For example, to provide additional retirement income.
Buy-to-Let Mortgage
October 2023
Our buy-to-let mortgage service
Our team here at The Mortgage Pod offer a flexible service tailored to your personal circumstances. If you are new to buying rental properties, we will talk you through everything you need to know about BTL mortgages. If you already know your stuff and are just looking for the best interest rate, then great – we’ll get right on it.
Buy-to-let mortgages for private landlords
We consider a private landlord to be anyone owning 3 or fewer mortgaged buy-to-let properties, either now or on completion of a new purchase. We’ll help you get the best mortgage rates for your circumstances, whether your goal is to change an outstanding mortgage balance or purchase a new property. We’ll even take care of your mortgage application so you can focus on your business.
Buy-to-let mortgages for portfolio landlords
A portfolio landlord is considered by the Prudential Regulation Authority (PRA) to be any landlord that owns four or more mortgaged buy-to-let properties, including any owned in their own name, jointly or within a limited company.
We’ll assign a mortgage adviser from our team of experts to conduct an in-depth review of your existing property portfolio. Your adviser will also provide guidance on maximising your monthly rental income to ensure you achieve the best rental yield.
Can The Mortgage Pod help me get a buy-to-let mortgage?
Whether you’re a seasoned property investor looking to add to your portfolio or hoping to secure your first rental property, The Mortgage Pod has got you covered. With clear, simple, and transparent advice, we’ll help you understand your options and apply for a buy-to-let mortgage.
We’ll be there every step of the way to answer your questions and take the pressure off during the entire application process.
To get in touch, please fill in our contact form, and we’ll call you as soon as possible.
FAQs
Can I change my residential mortgage to a BTL mortgage?
If you no longer plan to reside in your current property, then changing it to a buy-to-let mortgage and renting it out may be a good option. You can remortgage to a new lender, or under the terms of your existing mortgage, you may be eligible for ‘consent-to-let’.
Will my rental income be considered when applying for a buy-to-let mortgage?
Yes, you need to provide evidence of this income in the form of an SA302, which is your tax calculation. Your full tax return (SA100) may also be required and provides the breakdown of your profit from UK Land and Property.
Can I change my residential mortgage to a BTL mortgage?
If you no longer plan to reside in your current property, then changing it to a buy-to-let mortgage and renting it out may be a good option. You can remortgage to a new lender, or under the terms of your existing mortgage, you may be eligible for ‘consent-to-let’.
Will my rental income be considered when applying for a buy-to-let mortgage?
Yes, you need to provide evidence of this income in the form of an SA302, which is your tax calculation. Your full tax return (SA100) may also be required and provides the breakdown of your profit from UK Land and Property.
How much deposit do you need for a buy-to-let mortgage?
The minimum deposit you need to purchase a property to rent is typically 15%. However, with a 25% deposit, you are more likely to get the best deal and, in turn, achieve a greater rental yield.
Do you need a salary to get a buy-to-let mortgage?
While some lenders have minimum income criteria, it is possible to obtain buy-to-let mortgages without a salary. You can even use evidence of your “profit from UK land and property”, such as an SA302, as an acceptable income source if you already own BTL properties.
Can I live in my own buy-to-let?
Under the terms and conditions of your buy-to-let mortgage, you will not be permitted to live or reside in the property. You would be considered in breach of the conditions of your mortgage offer if you were to do so.
If you are looking to fund a residential property to live in, you need a residential mortgage, and we would suggest checking out our first-time buyer mortgages or home mover mortgages pages here.
What is the stamp duty on a buy-to-let property?
Stamp duty is due on all buy-to-let properties at the standard rate plus an extra 3% of the purchase price.
Most buy-to-Let mortgages are not regulated by the Financial Conduct Authority.
