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About buy to let mortgages

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2 min read

Find out about Buy-to-let (BTL) mortgages and some of the main differences with residential mortgages.

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Mortgage IQ Team
Mortgage IQ team

Last updated: 6 January 2022

What is a buy-to-let (BTL) mortgage?

A buy-to-let mortgage is a mortgage for a property you plan to rent, rather than living in it yourself – making you a landlord. As a landlord, you can start to charge rent to cover mortgage repayments and the costs of maintaining your property, which can be profitable.. However, purchasing a buy-to-let property has the potential to be a minefield, unless you seek professional advice

What makes a BTL different from a residential mortgage?

  • The fees tend to be much higher
  • Interest rates are usually higher
  • The minimum deposit is usually higher than required of a residential mortgage
  • Most BTL lending is not regulated by the Financial Conduct Authority (FCA)
  • BTL mortgages are often interest-only. This means you only pay the interest each month, and not the capital amount. At the end of the mortgage term, you repay the original loan in full.

Tips when deciding on a BTL

  1. Consider additional costs which accompany BTL properties
    1. Stamp Duty
    2. Tax costs
    3. Rates
    4. Agent fees
    5. Insurance
    6. Maintenance fees
  2. Compare potential mortgage payments to possible rental income
  3. Consider the area-
    1. Is the area sought after for renters?
    2. Are there good schools and transport links?
  4. Do you feel the property will grow in value?

Next Steps

Chat to one of our advisers, they can help you understand BTL mortgages and specific lender criteria.

The Financial Conduct Authority does not regulate some aspects of buy to let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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Use our simple mortgage calculator to see how much you could potentially borrow. Remember this is indicative only, speak to an expert adviser for a full calculation, specific to you.

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Stamp Duty Calculator

It is important to consider other costs. Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England and Northern Ireland. Use our calculator to find out how much this may cost.

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