What is a Buy to Let Mortgage?

Buy to Let over a Standard Mortgage Deal

If you are buying a second property for the purposes of securing a rental income then you need to apply for a different type of mortgage. This mortgage is known as Buy to Let and it is a legal requirement should you be renting the property out to tenants.

The vast majority of buy-to-let mortgages are provided on an interest-only basis. This means that, for each month of the mortgage term, you’ll only pay the interest on the loan, and none of the capital. This is how most landlords prefer to repay their loan although it doesn’t necessarily always stand. It is still possible to get a repayment loan with a buy to let deal.

Interest only can be good news in the short term as you’ll be able to keep your monthly outgoings low, but you should have a plan to either pay off the full loan or re-finance at the end of your term.

Buy to Let Deposit Requirement

Investment property mortgage deals usually require you to stump up at least 20-25% of the value of the home. Before the pandemic hit, some buy-to-let mortgages were available with a 15% deposit. These seem to have all but disappeared now though. That’s not to say that they won’t return at some point in the future.

You can use a mortgage comparison calculator to compare buy-to-let deals online. Interest rates on BTL are generally a little higher than home buyer deals but they have been steadily falling over the years.

Find the best mortgage deals, try out our calculator today
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