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Buy To Let

The Buy to Let mortgage is aimed at people who want to buy a property in order to rent it out

‘Buy to let’ is a mortgage for landlords who want to buy property to rent it out.

How does it work?

Buy to let is a type of loan where you buy a property specifically to rent it to tenants. The amount you can borrow depends largely on the rental income you expect to get from the property.

The difference between interest-only and repayment mortgage

The key question when applying for a Buy to Let mortgage is whether to use an interest-only or repayment mortgage. Most of the investors choose interest-only mortgages. This means that you pay the interest each month and therefore won’t pay off the borrowed balance until the term ends.  At the end of the mortgage term, you repay the original loan in full. With an interest-only mortgage, the monthly payments are lower, but you have to pay off the capital at the end of the mortgage term.

The difference between interest-only and repayment mortgage is that with a Buy to Let repayment mortgage, each month you pay back both the interest on your mortgage and part of the capital.

Buy to Let mortgage through SPV

SPV (Special Purpose Vehicle) is a legal entity usually formed for purchasing Buy to Lets or for a property development project. It allows investors to apply for a buy to let mortgage as a limited company instead of doing it in their personal name. Limited companies are separate entities. Getting a loan through SPV it’s an easy process. Limited company mortgages are not considered to be a form of mainstream lending however many landlords are applying through an SPV limited company to take advantage of potential tax relief and reduction in personal liabilities. This way instead of paying income tax, you’ll pay corporation tax. Corporation tax for the 2021-2022 tax year is 19%.

Who is eligible for Buy to Let mortgage?

  • you should be 18 years or older (21 or older if you’re considering a joint application)
  • you can apply on your own or with up to four people (depending on the lender)
  • minimal deposit between 20%-25% (depending on lender and landlords experience)
  • preferred residential property owners (there are lenders which accept landlords without own property)

If you have any questions regarding Buy to Let mortgages or our services, please do not hesitate to contact us. Our mortgage advisers will be happy to answer your questions and explain all the details.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services and some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.