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Buy to Let Mortgage Quotes
A Buy to Let mortgage is different from a residential mortgage because the lender calculates the size of your loan not on your income, but on the potential rental yield of the property you wish to buy.
Buy to Let mortgage lenders offer up to a maximum of 85% loan to value, although the best deals have been restricted to 60% - 80% loan to value. When market conditions improve, it may be that Buy-to-Let mortgages are once again available up to 85% of the buy to let property value, although a return to 90% loan to value products such as were offered by Mortgage Express in the past, would seem highly unlikely.. Therefore a minimum 25% deposit is required in most cases. We can help find some great mortgage deals for landlords.
Buying a property to let out has now turned into a viable and profitable option for many people, and offers many advantages when considered alongside traditional ways of saving for the future. Whilst short term profits have been made in the past, current market conditions urge caution, especially as the value of a buy to let property, and the rent being received can fall as well as rise.
Broadly, there is little difference between an investor or landlord arranging a Buy to Let mortgage, and a home buyer arranging a standard residential mortgage for owner occupation. Buy-to-Let mortgages are subject to the usual status checks, and most buy to let mortgage lenders will expect an applicant to have a good credit history and employment record. Loans can be arranged for terms of between 5 and 45 years although most Buy to Let lenders will have age restrictions in place.
Typically the mortgage lender will calculate the maximum Buy to Let mortgage available by examining the extent to which the rent exceeds the interest only mortgage payment. Most buy to let lenders will require rental coverage to be 125% of the monthly interest only mortgage payment, but the range available on the market offers options between 100% coverage and 130% coverage.
Every lender calculates their maximum lending in a different way, with some basing the coverage on the actual monthly payment, and some basing the coverage on a theoretical interest rate such as Bank of England base rate plus 4.45%. However the following two calculations can be useful in determining either
- the mortgage available if you know the rent, or
- the rent required if you know the maximum loan desired.
- Rent divided by 125%, multiplied by 12, and then divided by the buy to let mortgage rate (or the assumed rate the lender is using) gives the maximum loan available. i.e.:- £750 ÷ 125% x 12 ÷ 6.75% = £ 106,666
- Loan amount multiplied by the buy to let mortgage rate (or the assumed rate the lender is using) divided 12 and then multiplied by 125% gives the rental income required i.e.:- £106,666 x 6.75% ÷ 12 x 125% = £ 750
Two features make property a particularly attractive investment. A Buy to Let mortgage allows you to borrow the lion's share of the property value, whilst also enabling you to keep the growth in the value of the whole property - not just your deposit. This process is known as 'gearing' and is the key to the attractiveness of buying to let.
Example of Buy to let mortgage criteria.
- A minimum income per application of £10,000 per annum is required.
- Max No. of Properties 4 - Unlimited
- Max. Lending £2 million
- Max. LTV 90%
- Maximum lending per property £1 million.
- Minimum acceptable property value or purchase price (whichever is lower) is £40,000 (£75,000 in London postal districts).
- Rental income must cover 125% of the proposed monthly mortgage payments based on standard variable rate on an interest only basis. (100% rental cover available)
- H.M.O , Student lets, and D.S.S. lets possible.
- Confirmation of anticipated rental income will be provided by the valuer as part of the valuation.
- The property may be let on an assured shorthand tenancy or to a company on a corporate let. This can be renewed without the lenders consent.
- Holiday lets are possible.
To find out more about Buy to Let mortgages , simply complete the Buy to Let mortgage Mortgage Quote request form above to receive details of the best Buy to Let mortgage to suit your individual circumstances.