Since this is considered as a business matter, the rates for Buy to Let mortgages can higher than the usual residential mortgage and can require a higher amount of deposit.
Buy to Let mortgages are similar to a normal mortgage in the respect that, if the land owner fails to secure tenants for his property, there may be a chance for the property to be reclaimed due to land owner’s lack of payment. Maintenance costs and the housing market can all affect the land owner’s potential income from his property.
Requirements for Borrowing
Most residential mortgages are calculated and approved based on the borrower’s primary income but buy to let mortgage have a slightly different procedure of computation. The borrower needs to prove that he or she will be able to pay off her mortgage interest with the income from her rental units by applying a rent to interest cover calculation. Lenders have different RTI cover amount but the rental income should always pay around 125% to 130% of the monthly mortgage compensation.
Most buy to let lenders give 75 years before the loan reach its maturity but other feel generous enough to extend it to 85 years.
Buy to let mortgages are not regulated by the Financial Conduct Authority or FCA but recent developments have been suggested that borrowers classified as ‘accidental landlords’ will be under the regulations of a residential mortgage.
Using a mortgage broker is advisable
Most Buy to Let mortgages are only accessible through intermediaries, which can make it difficult for you, if you decide to apply directly. In choosing a mortgage broker, make sure that they are independent so you’ll avoid one- sided suggestions just like AMG Mortgages. They will be able to use their connections and expertise to help you secure a buy to let mortgage and help in setting up your mortgages so you’ll be able to pay it off more easily.