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Buy to Let Mortgages

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What are buy to let mortgages?

A buy to let mortgage is a type of mortgage specifically sold to individuals or companies looking to buy property as a form of investment, as opposed to a place to live. If you are interested in buying a property that will be used to rent out, most lenders prefer that you do not finance it with a standard residential mortgage. They will instead recommend a buy to let mortgage.

Typically, buy to let mortgages are more expensive than standard mortgages. For the most favorable rates, the lender may also require deposits of between 25% and 40%, although we do have access to some lenders who will consider deposits as little as 15%.

What should I consider when going for a buy to let mortgage?

Personal buy to let mortgages

This is simply buying property to let in your name. The terms of personal buy to let mortgages have changed since the implementation of tax changes in 2017. In more recent times even more of the favourable tax breaks and perks have been removed from those investing in property in their own personal name. Speak with DNA today to discuss what might work best for your circumstances.

Limited company buy to let mortgages

This refers to buying rental property under a company under a special purpose vehicle (SPV). This way, you get to own the rental property under a limited company name. Investing under an SPV can have some great benefits and tax incentives. Careful consideration should be given to whether you invest in property through your own personal name or a limited company.

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What are buy to let mortgages?

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FAQs

What types of buy to let mortgage are there?

You can choose to get a personal buy to let mortgage or a limited company buy to let mortgage.


What are buy to let mortgages?

A buy to let mortgage is a type of mortgage specifically sold to individuals or companies looking to buy property as a form of investment as opposed to a place to live. If you are interested in buying a property for rent, most lenders prefer that you do not finance it with a standard residential mortgage and will instead recommend a buy to let mortgage.


What is an income multiple?

An income multiple is what a lender occasionally uses to calculate a maximum figure they can look to lend you for a mortgage, for example; 4.5x income multiple on an income of £30,000 per annum would amount to a £135,000 mortgage. This however could reduce when the overall affordability of an application is looked into. Details such as monthly commitments on both household costs, bills etc, along with unsecured credit commitments such as credit cards or car finance will all have a bearing on what they lender deems to be ‘affordable’. Lenders have tightened their affordability models and how they assess a mortgage application and therefore it is now key to ensure that consumers are comfortable with mortgage repayments.


How much can I borrow?

This all depends on your personal circumstances. Many factors go into making a decision on how much you are eligible to borrow from a lender when enquiring about a mortgage. These include ‘income multiples’ (please see above what is an income multiple section for more details), your credit score (please see what is a credit score section above for more details), your overall finances – how much you currently have as unsecured debt, how many dependents you have, what mortgage term you will be looking at, what product you will consider and last but certainly not least your income. These are just a few of the factors taken into consideration, but as professional mortgage specialists, we can help advise you on your mortgage needs.