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Get the best out of your BTL mortgage


By The Orchard Practice

Many fixed mortgage deals will be approaching the end of their term this October, so it’s a good idea to review your buy-to-let mortgage.

With interest rates still at low levels and demand for rental properties increasing around the country, investing in a buy-to-let (BTL) is a popular choice for many.

Buy to let basics

A BTL mortgage is a specific type of product for those who want to buy a property with the intention of renting it. Because of this, there are different terms and rules around a BTL mortgage (compared to a regular mortgage for a property the buyer intends to live in.)

  • With a BTL mortgage, the anticipated rental income is taken into account when the lender calculates how much you can borrow.
  • A BTL mortgage could suit investors with enough equity to put down a deposit of at least 20% of the value of the property (but some lenders could require up to 40%.)
  • Your credit record is closely scrutinised with a BTL mortgage, as with a regular mortgage application.
    Interest rates for BTL mortgages are usually higher than a regular mortgage.

Things to remember

If you have a BTL mortgage already and its fixed interest rate term is coming to an end, you may be thinking about switching products or providers to gain a better deal. Here are some other things to look out for:

  • Examine all of your options into the type of product to suit your investment going forward. A financial adviser is best placed to help you with this.
  • Don’t forget to research any fees and charges around changing your product too, as these could be higher than you expect.
  • When changing products, you may be asked about your property’s rental income history in order to assure any new lenders that you are able to keep up with mortgage payments.
  • Show that you have sufficient savings to cover any gaps in rental periods when your property could be unoccupied.
  • For your own peace of mind, having a cushion of savings available to cover any essential repairs is important.

If you are looking to remortgage your BTL property or are thinking about transferring your mortgage to a different provider, our advisers can help you find a product that best suits you.
Some buy to let mortgages are/is not regulated by the Financial Conduct Authority.