Buy to Let Mortgage – Advantages and Disadvantages

Renting an apartment most times can be so tiring that you might even want to give up. But don’t give up now because there is a better way to rent an apartment without stress. Buy to let mortgage has allowed you to buy a property to rent out rather than living in it.

Buy to Let Mortgage - Advantages and Disadvantages

Being a landowner is the best feeling ever because you can choose who to rent an apartment to and you also get the decisions when it comes to your property. Most BTL mortgage rates are interest only and what this means is that the monthly repayments will only pay off the interest and not the amount owed on the mortgage. But the capital will be paid off in full at the end of the agreed term.

When comparing buy to let rates it is important to access the overall cost of the loan as a cheap initial rate can sometimes be outweighed by high fees. Some lenders charge set fees while others charge a percentage of the amount borrowed. For instance, you will be charged 0.5% of the loan.

How Much Can I Borrow on a Buy-to-let Mortgage?

The minimum deposit for a Buy to let mortgage depends. It is usually 25% of the property’s value but it could be between 20-40%. So, for a property that costs £250,000, you will be expected to put down anywhere between £50,000, £62,500, and £100,000.

Who Can Get Buy to Let Mortgage

Not everyone is allowed to get a Buy to let mortgage except landlords and landowners. But you might get a buy to let under the following circumstances.

  • If you have a good credit record and you are not stretched too much on your other borrowing.
  • If you want to invest in a house or flats
  • If you already own your own home whether outright or with an outstanding mortgage.
  • You can afford to take and understand the risks of investing in property
  • If you are under a certain age, lenders usually have an upper age limit which is between 70 and 75.
  • You must be over 18 or 21 when you apply

If you are between the age of 70 and 75 this is the oldest you can be when the mortgage ends not when it starts. For instance, if you are 45 when you take out a 25year mortgage it will end by the time you are 70.

Advantages of Buy to Get a Buy to let mortgage

Just like you already know Buy to let mortgages are mainly for landlords who want to buy property to rent it out. So definitely you should know the advantages of buying to let. Well if you don’t know the advantages just keep reading this article below.

  • Offset the costs against tax, this means that you can claim back some of the cost of running your rental property.
  • You get to enjoy long-term investment and gain; there is a guarantee that you will see the value of your property increase over time.
  • Generate an income and cover mortgage repayments, this depends on how much rent you charge and the cost of your monthly repayments.

Aside from this, you can find out that the property pays for itself and that you could even make income from rent payments.

Disadvantages of Buy to let Mortgage Rates

Just as Buy to let mortgage has advantages it also has disadvantages. But it doesn’t mean buy to let mortgage isn’t worth the stress. So let’s take a look at some of the disadvantages below.

  • The disadvantage is that there could be damage to the property and you will have to cover any damage or repairs to the property.
  • The costs of running an empty property.
  • Stamp duty surcharge, here landlords are meant to pay a 30% stamp duty surcharge.

However, there are times when your property might be vacant but you still have to pay mortgage repayments, council tax bills, and other maintenance costs without the rental income to pay for them.

How to Get the Best Buy to let Mortgage

As a landlord or landowner, it is easy to get Buy to let mortgage once you have decided if buying to let is right for you. You also need to be prepared for any loss because you could make money and at the same time, you could lose money. So here is how to get a Barclays to buy to let mortgage.

  • First, you have to choose a property that is within your budget
  • Find out what buy to let mortgage is available.
  • Speak to a mortgage advisor to help you find the best deal.
  • Contact a lender to see if they can set up an agreement in principle
  • Get an AIP or MIP to let you know how much you can borrow

So once you have found a suitable property and your offer has been accepted you can now begin the full mortgage application.

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