There are many things to consider before deciding if becoming a landlord is right for you, below we try to answer some of the most frequently asked questions in relation to buy to let mortgage products.
How many Buy to Let Properties can I have ?
There is no limit to how many buy to let properties you can own outright but if you require a mortgage to purchase them most lenders will want to limit their exposure in case of default. Some will limit each applicant to 1, 2 or 3 properties and some will allow many more depending on your circumstances.
If you are trying to expand your property portfolio but don’t know where to go contact us and we will do our best to help.
How Much can you Borrow ?
The amount that you can borrow on a buy to let property is calculated differently from a residential application. Your lender will look at the anticipated rental income which they will expect to cover your mortgage repayments by at least 125%.
Your lender may request proof of your anticipated rental income which can usually be obtained from an approved letting / estate agent or a valuer.
Repayment or Interest Only
Interest Only mortgages are hard to get on residential properties but many buy to let investors choose this repayment method as it means that they can cope with void periods of tenancy more effectively as the monthly repayments are much cheaper.
As a landlord you can still make overpayments if allowed by your lender or make lump sum payments in between fixed-rate deals in order to reduce the loan amount.
If you choose an interest-only mortgage product it’s important to have a separate repayment strategy in place as you will not be reducing the loan amount with your monthly repayments.
If you want to guarantee that you will own the property outright at the end of the mortgage term a repayment mortgage is the right option for you. Your monthly repayments will be noticeably higher because you are both reducing the loan amount and paying the interest.
Be careful though there is no guarantee that you will always have a paying tenant in the property so you should be confident that you could afford the monthly repayments even during void tenancy periods.
Is a Buy to Let Mortgage a good Investment ?
Like all investments buy to let properties do come with risks and you should fully assess all associated risks before committing.
It’s important that you do not risk money that you cannot afford to lose.