Buy to let mortgage lenders – who they are and what they can offer you

 

Buy to let mortgages are mortgages for borrowers interested in buying a property for the purpose of renting it, i.e. prospective landlords. There are several types of mortgages available for this purpose, whereas in the past only variable rates were available, and buy to let mortgage lenders can offer you various deals.

This kind of mortgage is very popular in the UK – it accounted for 10% of all mortgages taken out in 2006. This popularity may be due to the high demand for rental accommodation, with a rising population, especially in the student category. Property is also seen as a good long-term investment, as it is less volatile than areas of investment such as the stock market. Low interest rates also add to its appeal.

Borrowers
There are two main groups of investors who take out this kind of mortgage – amateurs and professionals. The professional landlord will boast a portfolio of possibly hundreds of properties, whereas the amateur may own just one or two properties for the purpose of renting.

Lenders
Currently the only buy to let mortgage lenders are intermediaries (mortgage brokers), however there are certain high street lenders that are considering offering this type of mortgage directly to the borrower. Lenders are financial specialists in this field and can make the whole process a lot easier for the prospective landlord by offering specifically-designed buy to let mortgages. Most mortgage brokers will require a deposit of 15% of the amount to be borrowed. The rent will need to cover 125% of the mortgage payments (in rare cases, 100% will be accepted) – this protects both the landlord and the mortgage lender against periods when the property has no tenant. With all this in mind, most borrowers opt for an interest-only mortgage, paying off the rest with the sale of the property.

Conclusion
Whether you are looking to embark on a career as a professional landlord or just hoping to buy one or two properties to rent out, buy to let mortgage lenders can offer you good advice and competitive mortgage deals for your needs. Lenders do require a minimum deposit, so it is best to shop around to find the buy to let mortgage most suited to your circumstances. Many lenders and financial specialists now operate online, offering you easy access to a mortgage quote and further advice on buy to let finance, including the most attractive interest rates. With the right property and mortgage deal (and the right tenants!), it is possible to make a good living as a landlord, and with the increasing demand for rental property, especially in the student sector, this is set to become an ever more popular choice for many homeowners in the UK.

The views in this article represent those of the authors and not those of Speaking Mortgages. This article does not represent financial advice and is purely editorial supplied by third party's. If there is information within this article which you wish to rely on then please check those details with relevant financial or other professionals prior to making any important decisions.