A buy to let mortgage is a loan for the sole purpose of purchasing a property to let. The property does not need to be tenanted when you buy it however, to qualify for a buy to let mortgage it must be your intention to let it to tenants after you have purchased it.
Like regular mortgages, you will be required to repay the loan with interest over the mortgage term and it will be secured against the property. Unlike owner-occupier mortgages the amount your mortgage provider will lend you will be dependent on your expected rental income, as well as your income. In some cases your income is not ever considered. Buy to let mortgages tend to have a slightly higher interest rate and you will typically require a minimum deposit of 25% of the property’s value
Buy To Let Mortgages have increased in popularity over recent years. The main reasons behind this are:
- The potential for excellent long term capital growth.
- An additional source of income for retirement.
- Having a property as an alternative investment to an existing investment portfolio.
- More lenders having entered the market leading to more competitive, specifically-designed, accessible buy to let mortgages.
Buy to Let Mortgages are not usually regulated by the Financial Conduct Authority.
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