If I am interested in buy to let mortgages – how much can I borrow?
How much can I borrow?
Buy to let properties are the perfect way to secure an income, and have a property in the future which you can either sell, or move into. Most people can’t afford to buy a second property outright, and choose instead to get the property using a buy-to-let mortgage which allows them to raise the money they need to get the rental property.
How do buy to let mortgages work?
With a buy to let mortgage, you borrow money from the bank as though you were buying your own home, and you have monthly repayments in exactly the same way. The main difference is that you will have to rely on the rents from your buy to let property in order to cover the mortgage. This may result in fallow periods where you have no rent at all, and this can lead to problems paying the mortgage.
How much does a buy to let mortgage cost?
Calculate the mortgage costs
The buy to let mortgage works just as a standard mortgage does, but you can expect to pay more for your loan. The mortgages are usually between 1 and 1.5% higher than the standard mortgage for the area, as the bank will be taking more of a risk. In addition, you may also have to put down more money for the initial deposit than is standard for a family property. When you buy a standard family home, you may be allowed to put down as little as 5% of your mortgage, but with a rental property you may be required to deposit 25%, considerably more. You may be tempted to buy the house as a standard property and then let it out, but in fact this is mortgage fraud, and you may get into serious trouble.
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