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Finding a buy-to-let mortgage

Selecting a product

There is a wide range of buy-to-let mortgages lender and products available and several different ways to go about finding a mortgage to suit your own specific circumstances. The main choices are either to go directly to a buy-to-let lender or your current bank; employ a mortgage broker to source a product for you; or use the internet and other resources to research the buy-to-let mortgage market yourself.

Going directly to a buy-to-let lender or your current bank may reduce the number of  products available to choose from, and some of the larger buy-to-let lenders only deal through mortgage brokers; using a professional mortgage broker should ensure that you get a competitive rate from a broader range of products, although you may be charged an additional upfront broker fee for the service; if you are confident about choosing a suitable mortgage yourself, there are tools available on the internet which enable you to research the buy-let-mortgage market and apply for a mortgage online.

Lending criteria

Searching for and selecting an appropriate buy-to-let mortgage involves checking that your application fits the lender’s specific criteria, and each lender has different requirements.

Some of the more common aspects considered by buy-to-let lenders are listed below:

  • maximum loan to value (loan expressed as a percentage of the property valuation/purchase price)
  • rental income – it is normally necessary to demonstrate that the expected rent for the property exceeds the monthly mortgage payment
  • maximum and minimum loan size
  • location of property
  • type and construction of property (flat, house)
  • size of property (bedrooms, floors)
  • houses in multiple occupation (HMOs)
  • student lets
  • minimum and maximum age of applicant
  • employment status of applicant (employed, self-employed)
  • first time buyers
  • limited companies
  • ex-pats and foreign nationals

It is important to make sure that you meet the lender’s criteria before applying for a mortgage.

Comparing mortgages

There are hundreds of buy-to-let mortgage rates  available to choose from, designed for various purposes and aimed at different customers’ needs. There are a number of key factors to look at when comparing different rates to find the products that are most cost effective, including:

  • initial interest rate and term
  • fixed or variable rate
  • reversionary rate
  • monthly mortgage payment
  • arrangement fee
  • booking fee
  • early repayment charges
  • Student lets

Each of these factors can affect the total cost of the mortgage over a given period of time.