An introduction to buy to let mortgages

When you choose to invest in a property that will not be your main residence there are a number of things you need to keep in mind. Most importantly the mortgage you get will be different and you’ll have specific responsibilities. Capital Alliance Financial Services Ltd is here to help, offering support with buy to let mortgages Nottingham clients can have confidence in.

So who can get a BTL mortgage?

There are some requirements if you want to get one of these mortgages. Firstly you must be able to afford the risk. This means you need to show you have a good credit score, a suitable income, and the right capital to draw on. You may find it difficult to get a buy to let mortgage if you don’t already own a home. Finally there will be upper age limits with lending, typically between 70 and 75. You need to make sure you won’t exceed these.

What are the differences between BTL and ordinary mortgages?

Although there are many similarities between both types of mortgage, the differences can be substantial. For example the fees for lending and the interest rates can be much higher. On top of this the minimum deposit is much higher. Although it is possible to get a 5% or 10% mortgage on your main residence you may need between 20% and 40% for a buy to let property.

A major difference you may find is that BTL mortgages can be interest-only. What this means is that there are no monthly fees to pay; instead lenders pay off the interest. Then once the mortgage term ends all of the capital borrowed is paid off in full. This tends to accompany the sale of the asset or a re-mortgage.

How much can you lend?

There is an important caveat with buy to let mortgages. The amount you can borrow is linked to the rental income you can make on the property. Generally the mortgage will be between 25% and 35% lower than the monthly rent. This means that the investor should be able to cover their payments with the income they receive.

Capital Alliance Financial Services Ltd can offer help and advice to clients. We have become one of the best names for buy to let mortgages Nottingham has because we are approachable, friendly, and professional. We work to build a rapport with clients and always focus on helping them to get the perfect finance.

If you have any questions for us, please get in touch.