20th February 2025
Find out if you're eligible for a Buy to Let mortgage with our comprehensive guide.
A Buy to Let mortgage is a type of mortgage specifically designed for individuals or companies that want to purchase a property to rent out to tenants. Unlike a residential mortgage, which is intended for personal use, a Buy to Let mortgage is for investment purposes. The property owner becomes a landlord and generates income through rental payments from tenants.
There are many benefits of a Buy to Let mortgage and quite a few common reasons that people opt for this type of mortgage. A Buy to Let mortgage is a long-term investment with the potential for your property to grow in value over time. With the right property, rental income should be sufficient for landlords to cover their mortgage repayments and operating costs and may generate an income. Landlords can offset some of the costs of running your rental property against tax, however the tax benefits. Becoming a landlord is not for everyone as it requires a lot of commitment and has potential risks. If you’re unsure about this, then you should seek professional advice.
Whilst the Vernon has Buy to Let mortgages, we do not advise on whether they are suitable, and it’s up to the individual to do their own research before committing.
Any budding landlord should understand and be comfortable with the things that could go wrong when renting. Costs can increase, particularly if interest rates rise, and there’s no guarantee that these costs can be passed onto tenants who may well be struggling financially themselves. It’s critical to get the right tenant, because it can be costly if you need to evict, should rent not be paid or their behaviour be inappropriate. Additionally, whilst we have seen property prices increase significantly over the years, the value can also drop which could mean you lose money should you need to sell. This list is not exhaustive, and you should seek professional advice if you are unsure if it’s for you.
You don't need to own your home to apply for a Buy to Let mortgage. A homebuyer may not be able to afford a mortgage where they'd like to live but Buy-to-Let mortgages can allow them to get on the property ladder by investing in a property elsewhere in the country. It's a potential second stream of income that can set up buyers to afford a house for themselves, or even to invest in further properties to grow their portfolio. For new entrants to the market, their knowledge and experience of the property and financial markets will be considered. Underwriters may assess applicants to ensure competency.
You need to be a UK resident aged 18 or over. You should have good credit history and not be financially stretched by other debts. You may have to give evidence of income from employment or earnings from self-employment, separate from any rental earnings. We also offer Buy to Let mortgages to limited companies - many higher rate taxpayers purchase properties through a limited company structure to take reduce how much tax they pay on the rental income.
In terms of criteria for a Buy to Let mortgage, a higher deposit is often required, usually around 25% of the property's value. The property's potential rental income will be assessed to ensure it can cover mortgage repayments and property running costs. If there’s a shortfall in rental income, some lenders will also take into account income earned from employment. Lenders will look at the overall financial situation to make sure the mortgage is affordable.
If you're unsure whether you meet the criteria for a Buy to Let mortgage, don't worry - help is available. Get in touch to discuss your specific situation with one of our expert team. They can walk you through the requirements and help determine your eligibility, ensuring you have all the information you need before moving forward.
We also offer other types of Buy to Let mortgages. Find out more about Holiday Let mortgages here.
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