Best Buy-To-Let Mortgages

You won't be able to take out a standard residential mortgage if you're buying a property with the sole intention of renting it out, and even if you're an accidental landlord (for example, if you became a landlord simply because you were unable to sell your home after moving in with your partner, etc.), you'll need a suitable loan. In the case of the latter, some mortgage lenders may allow you to swap your residential mortgage to a buy-to-let arrangement, but generally speaking, you'll need a specialist product from the outset.

There are a few key differences you'll need to be aware of between residential mortgages and mortgages for buy-to-let:

• The income assessment is based on the rental income of your property You'll still need to meet strict affordability criteria, but buy-to-let mortgages are assessed primarily on your rental income, which must typically be at least 125% of the mortgage payment, although up to 145% is not uncommon, especially for landlords who are higher rate taxpayers. So, if you've got a monthly mortgage payment of £800, you'll need to be charging rent in the region of £1,000-£1,200 per month. Some lenders also have a minimum income requirement as well, thereby giving them assurance that you could meet mortgage payments during untenanted periods.
• Interest rates are often higher Even the best buy-to-let mortgages will often have higher interest rates than those you can get on similar deals for your own home, so it's important to factor this into your costing calculations.
• Deposit requirements are often higher, too. The amount of money that you'll need to put up to secure a buy-to-let mortgage can be far higher than for a residential alternative. While for a mortgage on your own home you might be able to access a deal with a deposit of just 10% or even 5%, these mortgages typically require an absolute minimum of 20% or 25%, with the very top rates reserved for borrowers who can stump up a deposit of 40% or more.
• High fees. Buy-to-let mortgages generally charge higher arrangement fees than their residential counterparts, which can add up to thousands of pounds. This means it's well worth shopping around and using a buy-to-let mortgage calculator, as well as enlisting the help of a good mortgage adviser. It can often be the case that a mortgage with a lower rate can work out more expensive if the arrangement fees are high, so performing detailed buy-to-let mortgage comparisons is a must.
• Age restrictions are often less strict. You'll often be able to secure a buy-to-let mortgage beyond typical retirement age, for the simple reason that the assessment is based on the rental income you receive. However, this makes void periods more of a concern, particularly if you have limited additional income after giving up work, so it may be worth looking to a fully managed solution for your property portfolio (again, speaking to a specialist adviser is highly recommended).
• There'll be additional eligibility criteria. Bear in mind that, while age restrictions can be less strict at the upper end of the scale, there may be tougher restrictions in terms of minimum ages – some lenders won't offer buy-to-let deals to anyone under the age of 25, for example, and some won't let you take out such a loan if it's your first ever property purchase. You may need to have a residential mortgage on your own home first, to show you're a trustworthy borrower.
• Interest-only mortgages are more common. Unlike in the residential mortgage market, interest-only mortgages are still readily available in the buy-to-let market, as it's assumed you're using the property solely as an investment and will repay the capital of the loan when the property is eventually sold. However, this is still a risky undertaking, as there's no guarantee of eventual house prices.

As with all mortgage dealings, finding the right option all comes down to performing a thorough buy-to-let mortgage comparison. This means you'll need to take everything mentioned above into account, from the deposit you have and the resulting loan-to-value (LTV) you're looking for, to the rental income requirements, fees and age restrictions. The best buy-to-let rates you can find will of course be a huge driver of your decision, but make sure to not be swayed by rate alone – as discussed above, the benefits of a lower rate may be outweighed by a large fee, so you'll need to do your sums.

You'll want to look at the additional features of a buy-to-let mortgage, too, such as the incentives offered, early repayment charges and whether there's the facility to make over payments (or similar). These incentives and additional flexibility can often be appealing, but again, make sure it works out as the best value option in the long run.

Start the process by using our comparison chart to get an idea of the best buy-to-let mortgages available. For a more personal comparison use the filters to select the elements which are important to you on our buy-to-let mortgage calculator. This allows you to search for deals based on criteria such as the value of your property, the amount of loan required, your preferred mortgage term and whether you’re looking for a fixed or variable rate, presenting you with suitable options accordingly.

• Make sure you know the value of the property you're buying (or remortgaging – you'll be able to find specialist buy-to-let remortgage deals as well as those for purchase), together with the value of your deposit.
• Know the market – make sure your rental income can more than cover the mortgage payments. Consider looking into fully managed solutions if you have no other income, as these arrangements could guarantee your monthly rent, even in the case of void periods.
• When looking for buy-to-let mortgages, consider everything from the mortgage rate to the fees, flexibility and additional incentives. Make sure to do a true cost calculation so you know it's the best value.
• Bear in mind the full APRC (annual percentage rate of charge), rather than looking at initial buy-to-let mortgage rates in isolation. Many lenders offer low rates for an initial period, but the revert rate could be much higher, so make sure to look at the full APRC for truly effective comparison.
• Consider whether you want a fixed rate buy-to-let mortgage, which will give you repayment certainty for the duration of the term, or if you'd rather have the flexibility of a tracker/variable rate deal. These can sometimes be cheaper and there's the chance that the rate (and therefore your repayments) could fall, but there's also the chance that it'll rise, so make sure you're prepared for either eventuality.
• Interest-only or full repayment? This could be one of the biggest decisions you make in terms of your mortgage, and it'll depend on your eventual goals – is your sole exit strategy to sell the property in a few years' or decades' time and use the proceeds to repay the loan? If so, what if house prices don't rise as much as you're hoping? Make sure to consider all the options and seek suitable support.
• Get the right advice. Buy-to-let can be a significant undertaking, particularly with the latest tax changes impacting the market, so it's vital to get the right advice so you're confident in making the right decision.
• Thoroughly compare all mortgages for landlords –  to get started, and ensure you're getting the best buy-to-let mortgage deals possible.

Property has long been thought of as a decent investment, particularly when compared to saving in cash, and it can even give stock market investment a run for its money. This view has been fuelled by continued house price rises in recent years, which have seen the value of bricks and mortar significantly enhanced.

It's an investment for the long-term, and but when you consider the fact that returns on cash savings are extremely low once inflation is taken into account, it's easy to see why it's so popular. For many, bricks and mortar is far more secure than investing in the stock market, too, as there's less volatility and you’ve got a tangible asset in your portfolio.

However, it's important to remember that, like any investment, returns from buy-to-let aren't guaranteed. There's a slim but ever-present chance that your property could go down in value, not to mention the fact that if you don't enjoy 100% tenancy, your profits could be compromised as you'd need to make the mortgage repayments out of your own pocket.

Then there are the various insurance payments and additional costs you need to consider, and that's before we get to the tax changes that have impacted the buy-to-let market of late, all of which are making it more difficult for all but unmortgaged landlords to make a profit. 

The buy-to-let industry has been subject to a range of new taxes designed to dampen the market for the benefit of homeowners. 

As a result, the profitability of buy-to-let arrangements has been compromised, and many landlords are questioning the affordability of remaining in the sector. It also means that many are considering becoming a limited company to avoid these higher costs Landlords who are structured as such will face a flat rate of corporation tax, which for some could prove beneficial.  

The higher costs impacting the sector also means it's even more important to find the best buy-to-let deals possible. Use our independent charts to compare buy-to-let mortgages (or buy-to-let remortgages, depending on your circumstances), and make sure to consider everything from its rate to any extra fees involved. That way, you can be sure that you're not only getting the best buy-to-let mortgage rates, but that its true cost will mean you can buy properties with confidence.

Our preferred mortgage broker has a team of friendly and experienced mortgage advisers who are on-hand to help with your decision; simply request a call-back and someone will be in touch shortly. Our mortgage advice service is available if you need to borrow from £50,000 up to 80% of your property's value.