Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority
Buy to Let Mortgage
Whether you’re a seasoned portfolio landlord, a first-timer, or just want to rent out your old flat we can help. Buy to let mortgages work a little differently to residential so we’ve outlined a few differences for you.
Minimum income
BTL mortgages require you to have a minimum income, this varies from lender to lender but the standard is £25,000 which can be a sole or joint income. There are lenders that’ll accept less.
Limited company structure
Using a limited company allows you to avoid losing out on tax relief and structure your income in a more tax-efficient way. There’s a range of pros and cons involved, and people are choosing to change their business set up and register in this way. So, it’s important to consider the potential benefits of a limited company for your Buy to Let.
Affordability
The amount you’re able to borrow depends on the market rent of the property rather than your income. lenders look at the relationship between the rental income a property generates and the cost of the loan. Most mortgage providers require an interest coverage ratio between 125% to 140%.
Stamp Duty
In addition to the regular stamp duty, buy to lets’ attract a further 3% in England and 4% in Scotland and Wales. You should factor this in when considering a purchase as it can be a substantial cost.
Deposit
For BTL (buy-to-let) the minimum deposit is higher. Although there are lenders that will accept a 15% deposit the criteria are strict and the rates are higher. For most people, the minimum you’ll need is 20-25% of the property value.