Buy to let mortgage rate UK: mortgages guide
Buy to let mortgage rates.

The amount you can borrow varies enormously from lender to lender and the only way to make sure that you're getting the best deal is to shop around. Lenders calculate the maximum loan in a variety of different ways, so if you aren't happy with the amount you're offered just look elsewhere.

As a rule of thumb the size of the loan increases with the size of your deposit. Because buy to let mortgages are regarded as being riskier than residential mortgages it's unlikely that you'll get away with a deposit of less than 15-20% of the total cost of the property. Providers generally steer clear of offering 100% buy to let mortgages, however some brokers will allow you to use equity from any property that you already own. If you intend to go down this route it's important to think long and hard about the financial implications of a downturn in the market.

Some lenders use the property's rental income to calculate the mortgage. If this is the case then the rent you receive must exceed your monthly interest repayments by between 130-150% (for example: to cover monthly mortgage repayments of £1000, you'll need to receive £1300-15000 in rent). Other providers base their calculations on a combination of your salary and the expected rental income.

Buy to let mortgage interest rates are usually higher than residential mortgage rates because of the associated risk. The idea behind this thinking is to safeguard against rises in the Bank of England's base interest rate and to protect both parties against the possibility of the property standing vacant for a time. Cautious investors will be happy to learn that lenders offer both fixed rate and capped repayment schemes.

At present both the Association of Residential Letting Agents and the Royal Institution of Chartered Surveyors agree that you can expect a let property to yield an annual net profit. However, they disagree on the exact percentage (somewhere between 3-7%).

 

 

 

 

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