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Buy to Let mortgages have now been in existence for over 10 years and have evolved quite dramatically over that time. However since the credit crunch there has been a number of departures from lenders including CHL, Paragon and Mortgage Trust and the loan to values have changed meaning that you now need a minumum deposit or equity in the property of at least 25%.
Interest rates have become more competitive and now not too dissimilar to residential mortgage rates. You have the option as with residential mortgages of Fixed, Discount, Tracker and Flexible mortgages and there are even a few lenders offering offset facilities.
In the main a Buy to Let mortgage should be self financing, this means that the lender requires the rental received from the tenant to cover the monthly mortgage payments. The preferred mortgage repayment option by most landlords is an interest only option and unlike the residential sector where lenders look for an investment vehicle behind the mortgage, Buy to Let lenders are happy that the landlord will be selling the property at the end of the mortgage term to pay back the initial amount borrowed.
Rental requirements by the lenders vary and are very often calculated at 125% at pay rate. But with the increased competition there are some lenders that only need the rental income to equate to the monthly payment, hence 100% at payrate. If the rental income requirement needed by the lender was still hard to achieve there are a few lenders that will look at each case on an affordability basis so will look at your earnings, the rental due and your existing mortgage commitment. If according to their calculation there is surplus then this can always be the alternative route to a BTL mortgage.
You will need a minimum deposit of 25% to secure a Buy to Let mortgage, there are some lenders however if you were purchasing a new build property and the builder was able to offer you the builders deposit paid then you could purchase the property with just 20% having allowed for a builders deposit of 5%.
There is no limit to how many Buy to Let properties you own, (you just need the deposits), there are still 100s of Buy to Let mortgages and Buy to Let remortgages available. At Grovelawn Financial over 30% of our business is in this market and as such are able to offer semi-exclusive mortgages from leading High Street and specialist lenders.
Buy to Let Mortgage Comparison | |||||||
|---|---|---|---|---|---|---|---|
| Lender | Rate | Term Type | Std Rate | APR | Fee | Early Repayment Charges | Max Loan to Value |
| The Mortgage Works | 3.25% | 1 year tracker until 31-Jul-2010 | 4.69 | 5.20 | 3.25% | 3% of loan amount until 31-Jul-2010 | 70% |
| The Mortgage Works | 3.75% | 2 year tracker until 31-Jul-2011 | 4.69 | 4.90 | 3.5% | 3% of loan to be paid until 31-Jul-2011 | 70% |
| B M Solutions | 4.25% | 2 Year tracker BBR plus 3.65% | 3.50% | 3.90% | 3% | 3% of loan amount within first 2 years | 60% |
| B M Solutions | 4.70% | 2 year tracker BBR plus 4.2% | 3.50 | 3.90 | 3% | 3% of loan amount within first 2 years | 75% |
| B M Solutions | 5.40% | 3 year fixed rate until 01-Sep-2012 | 3.50 | 4.10 | 2.5% | 3% of loan until 01-Sep-2012 | 60% |
| Coventry Building Society | 5.40% | 5 year fixed until 30-Jun-2013 | 4.74 | 5.10 | £1999 | 4% of loan to be paid until 30-Jun-2013 | 60% |
Buy to Let mortgage price comparison, last updated Saturday, 13th June 2009
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
This site is intended for UK residents only. The overall cost for mortgages for comparison is 7.2 APR.
The actual rate will depend on your circumstances. APR variable and based on a usual case.
Grovelawn Financial is a trading name of Grovelawn Limited, which is authorised and regulated by the Financial Services Authority.
Grovelawn Limited is Registered in England & Wales number 5030300. Registered Address: 98 Station Road, Sidcup, Kent, DA15 7BY.
Entered on the Financial Services Authority's Register — Register Number: 314204 — Consumer Credit Licence Number: 573287
The Financial Services Authority (FSA) do not regulate some types of buy to let, commercial, overseas mortgages, tax advice and credit or loans not secured on property.