Buy-to-let
Elevate Financial Solutions is a mortgage adviser based in Kent. We have branches in both Beckenham and Bromley offering mortgage advice locally and across the UK. Our mortgage services cover a comprehensive range of mortgage products including buy to let mortgages.
What Is a Buy to Let Mortgage?
A buy to let mortgage, often abbreviated as a BTL mortgage, is a type of mortgage used by people purchasing property as an investment and not to reside in. If you want to buy a property and then rent it out to other tenants, and then use the rent to pay your mortgage and maybe make a profit, you’ll need to use a buy to let mortgage instead of a standard residential mortgage.
You might also require a BTL mortgage if you become an “accidental landlord”, which is someone who decides to start renting out their usual residential property.
Buy to Let Mortgage Eligibility
Buy to Let mortgage eligibility differs widely between mortgage providers. In general, the criteria to secure a BTL mortgage is somewhat stricter, with many lenders imposing age restrictions by not lending for BTL purposes if you are younger than 25, or they will not consider you for a BTL mortgage if you earn below £25,000.
Another potential eligibility obstacle is a cap on the number of BTL properties you already own. Lenders may be less prepared to lend to landlords who already own a lot of rental properties.
Buy to Let Mortgages for Limited Companies
Some clients choose to buy rental property through a limited company. This can be advantageous for lots of reasons, including tax planning. However, securing a BTL mortgage through a limited company is not always straightforward or easy, especially if the company has just been set up.
Elevate’s professional mortgage advisors are also on hand to assist with BTL mortgages for limited companies. If you are considering this option and want to know more, or if you already use a company as a vehicle for your rental property portfolio, we can help. Our team will explain the process and can efficiently search the market for your options.
BTL Mortgage Types
There are different types of BTL mortgages, namely:
- Fixed rate
- Tracker
- Variable
- Interest only
Fixed rate BTL mortgages and Interest only BTL mortgages are often preferred. The former allows the landlord to know exactly what their repayments will be, while the latter is popular because the landlord only needs to pay the interest of the mortgage and the capital is paid back when the rental property is eventually sold.
Buy to let FAQs
How does Capital Gains Tax work?
Capital Gains Tax (CGT) is a type of tax you must pay when you sell or dispose of assets. It is taxed separately from your employment income. When you sell a property that is not your home, including a property used for rental income, you must pay tax on the difference between the amount you bought it for and the amount you sell it for. The amount of tax you pay will depend on these valuations and if you are a basic rate or higher rate taxpayer.
If you plan on buying a rental property and selling it in the future, CGT is something you should be considering.
What are the associated costs of BTL?
Buying a BTL property and becoming a landlord incurs cost you otherwise wouldn’t have to pay when buying a residential property. There may be premiums to pay concerning home insurance and you’ll probably have to pay letting agent fees. Moreover, a BTL mortgage may include higher arrangement fees compared with a residential mortgage.
Are deposits different for BTL mortgages?
Mortgage lenders typically ask for a larger deposit to secure a buy to let mortgage compared to standard residential mortgages. This is due to a greater risk associated with rental properties. Banks and lenders consider tenants more of a risk than someone buying a property to live in themselves, which is why they typically require a 25% deposit at least.
What is Stamp Duty?
Stamp Duty is a land tax that you must pay when you purchase a property. You will be subject to Stamp Duty whether you buy a residential home or a BTL property. If your rental property costs more than £40,000, you will need to pay an additional 3% of Stamp Duty, but some exemptions may apply.
Why Use an Adviser to Find a BTL Mortgage?
With stricter eligibility criteria, additional fees and more to think about, it can be difficult to cut through the noise and know what BTL mortgage to look for – or where to look for it. Get clarity on a difficult subject and secure the help of a mortgage adviser to guide you through the process. It will save you time, stress and could get you a better deal you otherwise would have missed.
Our mortgage broker team is based in Bromley and Beckenham, and help client across London. If you’re looking for buy-to-let mortgage advice get in touch for friendly mortgage advice today.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST FORMS OF BUY TO LET MORTGAGE.
Elevate Financial Solutions is a mortgage adviser based in Kent. We have branches in both Beckenham and Bromley offering mortgage advice locally and across the UK. Our mortgage services cover a comprehensive range of mortgage products including buy to let mortgages.
What Is a Buy to Let Mortgage?
A buy to let mortgage, often abbreviated as a BTL mortgage, is a type of mortgage used by people purchasing property as an investment and not to reside in. If you want to buy a property and then rent it out to other tenants, and then use the rent to pay your mortgage and maybe make a profit, you’ll need to use a buy to let mortgage instead of a standard residential mortgage.
You might also require a BTL mortgage if you become an “accidental landlord”, which is someone who decides to start renting out their usual residential property.
Buy to Let Mortgage Eligibility
Buy to Let mortgage eligibility differs widely between mortgage providers. In general, the criteria to secure a BTL mortgage is somewhat stricter, with many lenders imposing age restrictions by not lending for BTL purposes if you are younger than 25, or they will not consider you for a BTL mortgage if you earn below £25,000.
Another potential eligibility obstacle is a cap on the number of BTL properties you already own. Lenders may be less prepared to lend to landlords who already own a lot of rental properties.
Buy to Let Mortgages for Limited Companies
Some clients choose to buy rental property through a limited company. This can be advantageous for lots of reasons, including tax planning. However, securing a BTL mortgage through a limited company is not always straightforward or easy, especially if the company has just been set up.
Elevate’s professional mortgage advisors are also on hand to assist with BTL mortgages for limited companies. If you are considering this option and want to know more, or if you already use a company as a vehicle for your rental property portfolio, we can help. Our team will explain the process and can efficiently search the market for your options.
BTL Mortgage Types
There are different types of BTL mortgages, namely:
- Fixed rate
- Tracker
- Variable
- Interest only
Fixed rate BTL mortgages and Interest only BTL mortgages are often preferred. The former allows the landlord to know exactly what their repayments will be, while the latter is popular because the landlord only needs to pay the interest of the mortgage and the capital is paid back when the rental property is eventually sold.
Buy to let FAQs
How does Capital Gains Tax work?
Capital Gains Tax (CGT) is a type of tax you must pay when you sell or dispose of assets. It is taxed separately from your employment income. When you sell a property that is not your home, including a property used for rental income, you must pay tax on the difference between the amount you bought it for and the amount you sell it for. The amount of tax you pay will depend on these valuations and if you are a basic rate or higher rate taxpayer.
If you plan on buying a rental property and selling it in the future, CGT is something you should be considering.
What are the associated costs of BTL?
Buying a BTL property and becoming a landlord incurs cost you otherwise wouldn’t have to pay when buying a residential property. There may be premiums to pay concerning home insurance and you’ll probably have to pay letting agent fees. Moreover, a BTL mortgage may include higher arrangement fees compared with a residential mortgage.
Are deposits different for BTL mortgages?
Mortgage lenders typically ask for a larger deposit to secure a buy to let mortgage compared to standard residential mortgages. This is due to a greater risk associated with rental properties. Banks and lenders consider tenants more of a risk than someone buying a property to live in themselves, which is why they typically require a 25% deposit at least.
What is Stamp Duty?
Stamp Duty is a land tax that you must pay when you purchase a property. You will be subject to Stamp Duty whether you buy a residential home or a BTL property. If your rental property costs more than £40,000, you will need to pay an additional 3% of Stamp Duty, but some exemptions may apply.
Why Use an Adviser to Find a BTL Mortgage?
With stricter eligibility criteria, additional fees and more to think about, it can be difficult to cut through the noise and know what BTL mortgage to look for – or where to look for it. Get clarity on a difficult subject and secure the help of a mortgage adviser to guide you through the process. It will save you time, stress and could get you a better deal you otherwise would have missed.
Our mortgage broker team is based in Bromley and Beckenham, and help client across London. If you’re looking for buy-to-let mortgage advice get in touch for friendly mortgage advice today.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST FORMS OF BUY TO LET MORTGAGE.
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