What is a buy to let mortgage?

Buy to Let mortgages are a specific type of mortgage tailored to people buying a house purely to rent it out.

The rental market has revived considerably in recent years, and the buy to let mortgage has become a lot more prevalent.

This type of mortgage differs considerably from the personal mortgage - the amount you can borrow is not calculated in relation to personal income but by the potential rental income of the property. The rental income must, in most cases, surpass the monthly mortgage repayments by 25%-30%.

You will need to pay a deposit, usually at least 20% of the purchase. Most lenders prefer not to offer 100% buy to let mortgages, but you may be able to get one if you have equity to place as security.

Buy to let mortgages usually charge higher interest rates than standard UK residential mortgage rates because they represent an increased risk. For example, there’s always the possibility that you won’t be able to let the property out.