What is a...

Buy-to-Let Mortgage

A Buy-to-Let mortgage (BTL) allows someone to purchase a property with the intention of renting it out, rather than living in it themselves. If the owner wishes to let a property, either for short term agreements (such as holiday letting or student accommodation) or for longer terms, then they must legally obtain a Buy-to-Let mortgage rather than a conventional one.

Will my Buy-to-Let Mortgage appear on my Credit Report?

Mortgages of any type can appear on your Credit Report, providing your lender shares the account information with the Credit Reference Agencies. You can see how your mortgage appears on your Credit Report and which Credit Agencies are showing it by checking the data for yourself.

Our Multi Agency Credit Report collects your information from Equifax, Experian and TransUnion so you can see everything that a lender will see, all in one place.

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Are Buy-To-Let mortgages more expensive?

Often Buy-to-Let mortgages cost a little more than a conventional mortgage (usually around 1% more) and this reflects the additional risks involved to the lender. Buy-to-Let mortgages typically require the owner to put down a deposit of 25% or more, whereas conventional mortgages require a smaller deposit.

Traditionally buy-to-let lenders want rent to cover 125% of the mortgage repayments, although many have relaxed this in recent years. Despite this, they will still be looking for suitable assurance that the payments will be met.

The insurance required on BTL properties is also specialised and has requirements. It can often cost a little more than conventional home insurance as well.

The popularity of Buy-to-Let mortgages has grown in recent years as many people use it as an investment tool using the balance above the repayment amount as a means of generating income. Often people will have portfolios consisting of numerous properties. Obviously this is not without risk as the same potential problems with normal mortgages still apply.

As they are often more expensive, BTL mortgages are more susceptible to fluctuations in the market such as BOE Base Rate rises and house price changes. For example in an economic downturn there can be less demand for rental property or a drop on rent prices which will squeeze profits. Also they are responsible for the maintenance of the property and the costs that this incurs which can reduce income.

It is also important to consider the extra Stamp Duty that may be payable on a second home, which could drive up the overall cost of acquiring a rental property.

Are Buy to Let mortgages interest only?

In most cases, yes. The most common form of BTL mortgage is interest only, and the remainder of the property value is only to be paid upon sale.

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