What is a Buy To Let Mortgage
A buy to let property is a property you wish to purchase and rent to tenants. You are not allowed to legally live in the property. If you are a First Time Buyer you can purchase a buy to let property but the amount of lenders available is restricted and there are extra checks the lender makes in these circumstances.
When buying a buy to let property there are a few things you may need to know.
- The amount of loan you can borrow is pretty much dependent on how much rental income you get
- You will have to pay an extra 3% stamp duty on top of your normal stamp duty. If the property is below the value at which stamp duty becomes liable you will still have to pay the extra 3% of the purchase price
TIP. If you are purchasing a second property, ask your conveyancer/solicitor of the figure you will have to pay.
Buy To Let Q&As
If you have a 20% deposit, then you will have more lenders available to you.
If you have a 25% deposit, then have most of the Buy to Let lender market open to you and the rates are much lower than if you have a 20% or 15% deposit
If you are a First Time Buyer, then a minimum 25% deposit is required.
Get in Touch with our advisers to see if you are eligible
The two figures below are not real interest rates and are used ONLY for illustration purposes
The monthly payment below is based on you borrowing £150,000 on repayment over 25 years:
2 year fixed @ 1.49% – Arrangement fee £999 – Valuation fee £0 (free) – Solicitors fees £0 (free) – Monthly payment £599.20
2 yr fixed @ 1.99% – Arrangement fee £0 (none) – Valuation fee £0 (free) – Solicitors fees £0 (free) – Monthly payment £635.05
Therefore, the difference in the arrangement fees between the two rates is £999 but the difference in the monthly payments is £635.05 – £599.20 = £35.85 so multiply this by 24 months (2 years) = £35.85 x 24 = £860.40.
So, £999 is more expensive than £860.40 so it is in fact cheaper to go on the higher rate and pay no arrangement fee in this instance.
As I said please be careful as this is not always the case so check with one of our advisers first to see which is best
Whether you choose to go on a higher or lower rate mortgage does depend on several factors like the amount of mortgage you have, the term of the mortgage and the rates and fees themselves. If you get it wrong, it could cost your thousands so please speak to one of our advisers to ensure you are getting the best deal for you