Buy-to-let mortgages were designed to be mortgages to purchase property with the purpose of letting that property out. If you are looking to rent out your home and don’t have time to wait for your current mortgage to expire, or if you are looking to purchase an investment property and need a loan, then getting a buy-to-let mortgage is the best course of action.
This blog will shed light on the FAQs that surround buy-to-let mortgages to help you make an informed decision on if it will be a good idea to take this type of mortgage product out for yourself or not.
1 – How Do Buy-to-let Mortgages Differ from Traditional Mortgages?
The main difference between a buy-to-let mortgage and a traditional mortgage is that the buy-to-let mortgage will often be secured against the property you are fixing to purchase and rent out for income purposes. When you are purchasing a property for this purpose, the lender will get the property in the event of a default by the borrower. This is to ensure the property is not left empty if the borrower fails to make their payments. This is why you may hear the term “asset-backed” used to describe buy-to-let mortgages.
2 – Who May Benefit from a Buy-to-let Mortgage?
This mortgage is especially beneficial for individuals who want to rent out their property for income. A lot of people are looking for ways to supplement their income, and with the current trend of financial institutions offering buy-to-let mortgages, you will be able to do just that! This is also ideal for those who want to purchase a property and rent it out for a few years while they wait for it to appreciate in value.
3 – Will I need a large down payment when I get a Buy-to-let mortgage?
Yes, you will need to have a substantial amount of cash on hand in order to put down a buy-to-let mortgage. Many financial institutions will require that you have 20-30% of the property’s value in cash, though a few lenders are starting to accept 15% as long as the business case for a buy to let is well documented and stacks up.
4 – What Happens when My Buy-to-Let Deal Comes to an End?
Your mortgage will end when the loan is paid off in full. You will then have the option to renew the loan once again. If you are on a loan that is being amortised, there will be a point where the loan will be completely paid off. When this happens, you will have the option to renew the loan or to sell the property and use the proceeds from that sale to pay off the loan.
Conclusion
There are many advantages to taking out a buy-to-let mortgage. If you are looking for a mortgage for an investment property, a buy-to-let mortgage may offer the best choice for you. For more information on the different types of mortgages on the market, it’s worth speaking to a mortgage broker that can help you compare the different buy-to-let mortgages on offer, including the rates and fees. They can also guide you on how much deposit you will need to make and which mortgage product will suit your needs.
If you are looking for a mortgage, book a free initial consultation with one of our buy-to-let advisers at A Move Brokers. We offer a wide range of mortgage products and can help you get the best deal to suit your individual needs. Contact us and let us help you make decisions about your mortgage!
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.