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Buy-to-Let Mortgages

Buy-to-let mortgages can help you secure your future and build your property portfolio, whether you’re a seasoned investor or a first-time landlord.

Investor looking at property listings for buy-to-let opportunities.

Buy-to-let mortgages

As the name would suggest buy-to-let mortgages are mortgages designed for purchasing properties you then intend to let or rent out, instead of using it as your own residential home. It is unlikely that your lender will loan you money for a buy-to-let purchase with a residential mortgage first in place.

Benefits of a buy-to-let mortgage

A buy-to-let mortgage offers massive benefits to both experienced investors and first-time landlords. Here are some of the main ones:

Buying property is one of the safest investments you can make. For the most part, property values tend to increase consistently over time and you'll more than likely make a profit when, and if, you do sell.
A rental property is a source of income, once the rent covers your mortgage payments and any other associated costs with being a landlord.
Demand for rental properties has never been higher, so if you do go down this route, you shouldn't have any problem finding paying tenants.

What are the risks of a buy-to-let mortgage?

Buy-to-let mortgages are a great way to invest in your future and earn some income at the same time. However, there are some downsides you need to be aware of:

Most lenders will only offer you an interest only mortgage for a buy-to-let property, which means you'll have to make sure you either save regularly or be prepared to sell your property to afford the final payment.
Unlike residential mortgages, the deposit required by lenders on a buy-to-let mortgage is usually between 25% and 40% of the property value, and the interest rate charged is uaually higher too.
Investing in property is considered one of the safer ways to invest your money, but you need to be aware that shoudl your property's value fall below the amount you have borrowed, you'll be in negative equity and at that point (unless the value recovers) the property won't be worth enough to make the final payment.

Other things to consider before you buy-to-let

Unlike residential mortgages, mortgage lenders will look at how much rent you’ll be able to charge rather than how much you earn. You should expect your rental income to be 25-30% higher than your expected mortgage payments.
The government gets a piece of the action too. As a buy-to-let investor, you’ll pay an additional stamp duty surcharge, and you'll have to pay income tax on any profit you make from rent.
If your rental property is empty for any time, you’ll need to cover the bills until you find a new tenant .
There are generally increased ongoing maintenance costs with a rental property, compared with a standard home.
Finally, finding good tenants requires thorough referencing, background checks, income verification and a credit check, and staying compliant with lettings legislation is crucial.

Use our Frankly Calculators

Repayment Calculator

Thinking about your next mortgage? Use our Frankly repayment calculator to find out what your repayments could be, based on your loan amount, the desired term of your mortgage, and an indicative interest rate.

Stamp Duty Calculator

Stamp Duty, otherwise known as Stamp Duty Land Tax (SDLT), is the tax you pay when you buy property in the UK. You can use our Stamp Duty calculator to figure out what you’ll pay on your purchase (applies to houses, flats and land).

Need expert guidance?

Whether you’re starting out or growing your portfolio, our mortgage advisers can help you find the right deal for your buy-to-let property.

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