Buy-to-Let Mortgages

Business Buy-to-Let (BTL) mortgages are for those who want a loan to purchase a property to let out and not live in themselves, i.e. they become the landlord.

They are usually more expensive than residential mortgages, but they could help you become a property investor if you so wish. There are two types of BTL mortgage:

  • Consumer Buy-to-Let (CBTL) – any BTL contract not entered into by an individual ‘wholly or predominantly’ for the purpose of a business. They are for people who have become a landlord by default as opposed to making an active business decision, i.e. where a property has been inherited or has been previously lived in and the individual is unable to sell it, so resort to letting it out.
  • Business Buy-to-Let (BBTL) – any BTL contract for landlords who buy property specifically to rent out, so are only suitable for people who want to invest in houses and flats.

Buy-to-Let mortgages are only suitable for people who want to invest in houses and flats. Investing in property is risky, so you shouldn’t take out a BTL mortgage if you can’t afford to take that risk. They are in many ways just like residential mortgages, but with some key differences:

  • Interest rates on Buy-to-Let mortgages tend to be higher;
  • The minimum deposit for a Buy-to-Let mortgage is usually a quarter (25%) of the property’s value (some lenders offer deals with a 20% deposit, others want a 40% deposit);
  • The fees tend to be much higher;
  • The level of borrowing is typically based on the level of rental income; and
  • A 3% stamp duty surcharge applies, which applies to the entire purchase price of the property.

Most BTL mortgages are interest-only, which means you don’t pay anything off the lump sum borrowed each month but, of course, at the end of the mortgage term you need to repay the capital owing in full.

Unlike obtaining a mortgage on a property you wish to live in, BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA).

Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £595.