Whether you’re renting out a property you already own or are considering a new investment, securing a dedicated Buy to Let mortgage is essential. At Easy Street, we’re here to assist you in finding the perfect Buy to Let mortgage that suits your needs and aspirations.
Understanding Buy to Let Mortgages
A Buy to Let mortgage enables you to purchase residential property with the intention of renting it out to tenants. Unlike standard residential mortgages, Buy to Let mortgages typically require a larger deposit and come with higher interest rates. While you’ll still make monthly repayments, the goal is for the rental income to cover the mortgage costs, ideally leaving you with a profit.
Eligibility for Buy to Let Mortgages
To qualify for a Buy to Let mortgage, you must meet the lender’s criteria. While requirements vary between lenders, owning a home is often preferred, though not always mandatory. Additionally, you may need to demonstrate a certain level of income alongside the rental property to reassure the lender of your ability to cover mortgage payments, even if the tenant fails to do so.
Calculating Borrowing Capacity
Unlike traditional mortgages based on income, Buy to Let mortgages consider the potential monthly rent your property could generate. Lenders typically expect the rent to cover 125% to 145% of the monthly mortgage payment, based on either the pay rate or a stress-tested rate. Thorough research of the local rental market is crucial to ensure profitability and demand for your investment.
Interest Only or Repayment Mortgages
Many landlords opt for interest-only mortgages, where monthly payments cover only the interest rather than reducing the principal amount. While this approach results in lower monthly payments, it means the overall mortgage debt remains unchanged. Careful consideration and planning are necessary, as relying solely on property appreciation to repay the debt can be risky.
Understanding Risks Associated with Buy to Let
The primary risk of Buy to Let investment lies in potential costs eating into expected profits. Vacancies, property maintenance, and unexpected expenses can impact profitability. Additionally, factors such as setting appropriate rental rates and understanding tax implications are essential considerations for landlords.
Navigating Buy to Let Mortgages and Tax
Buy to Let investments are subject to stamp duty, with additional charges for existing homeowners. Additionally, rental income exceeding the HMRC Personal Allowance is taxable, requiring landlords to complete Self-Assessment tax returns. Working with an accountant or tax advisor can help manage tax obligations effectively.
How Easy Street Can Assist with Buy to Let
Many competitive Buy to Let mortgage deals are accessible only through Mortgage Brokers like Easy Street. Our team of qualified experts has a wealth of experience in helping first-time landlords achieve their rental income and mortgage repayment goals. From exploring mortgage options to guiding you through the application process, we’re here to support you every step of the way.
If you’re considering entering the world of Buy to Let investment, don’t hesitate to reach outfor our expert assistance. Our commitment to providing reliable mortgage advice ensures that you’re equipped with the knowledge and support needed to make informed decisions. Contact Easy Street today and let us help you embark on your Buy to Let journey with confidence.
