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Buy to let is when you buy a property with the intention of renting it out to tenants. Some landlords do this as part of an investment strategy, but increasingly it is individuals changing from a residential mortgage on their own home, to a buy to let mortgage when they move out (perhaps to move in with a partner or during a period of working abroad).
Buy to let mortgages are very similar to a mortgage on your home, with fixed rates and trackers available. However, you should expect higher arrangement fees with a BTL as well as a different way of assessing whether you can have the mortgage.
Most mortgage lenders link whether you can afford the mortgage, to the rent you are charging or propose to charge. Generally-speaking you'll need the rent to be at least 125% of the mortgage payment in order to satisfy your mortgage lender. But you should check carefully before making an application that you will be eligible, as a significant number of lenders have more stringent affordability requirements.
Remember too that while the lender may consider the mortgage affordable, you need to be happy it is too. Lenders don't factor in the other costs of running a buy to let property, such as insurance, agent's fees, and other maintenance costs.
Fixed rates are great if you want to know exactly what you are paying for a set period. Specifically in terms of buy to let they can be a great way to manage your costs. Sometimes fixed rates aren't as cheap as the best tracker rates available to landlords, but they do offer the certainty that your payment won't go up.
With short term fixed rates you should also consider the costs of remortgaging your BTL property regularly. When your fixed rate period comes to an end you will be on your lender's buy to let standard variable rate, or possibly a tracker based variable rate. This could be higher than your fixed rate, so if you don’t remortgage, it’s important you have enough manoeuvre in your budget to absorb the higher mortgage costs.
Speak to a BTL mortgage adviser Buy to let home Compare 3 year fixed BTL mortgages Compare tracker rate BTL mortgages Compare BTL mortgages for new landlords
Buy to let guides
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