If you are already a landlord or you’re considering investing in rental property you will need buy-to-let mortgages* tailored to your requirements.. 
 
AJM Financial works with many landlords and provides buy-to-let mortgage advice for those buying their first property through to those who have a large property portfolio investment. 
 
Choosing the right lender and calculating the true cost of a buy-to-let mortgage is not straightforward. We can advise you about a package that will suit you and help you to make sure the structure of your borrowing is right for you. 
 
We’ll explore everything from your property rental rates to your personal income and the overall value of your portfolio so that we can give you the best recommendations. 

How buy-to-let mortgages work

Buy-to-let mortgages are like other mortgages although buy-to-let interest rates will be higher. The minimum deposit is usually 25% of the property’s value although it can vary between 20% and 40%.

The maximum you can borrow is normally linked to the amount of rental income you can expect to receive. Lenders generally expect your rental income to be 25% to 30% more than your monthly mortgage payment, whether you are planning residential, Airbnb or holiday rentals. Some lenders will look at your personal income to increase the loan amount.

In many cases they will be interest-only buy-to-let mortgages, and you will pay back the capital amount at the end of the term, although repayment options are also available.

Generally, they aren’t regulated by the Financial Conduct Authority (FCA) unless you intend to let the property to a close family member. These are known as consumer buy-to-let mortgages and the same affordability criteria will apply as a mortgage for your own home.

Is buy-to-let the right investment choice for you? 
If you are planning to invest in houses or flats and you understand the risks of investing in property a buy-to-let mortgage could be a good option for you. 
 
Many lenders specify that you should already own your own home, either outright or with a mortgage, earn at least £25,000 a year, have a good credit record, and any other debts you have on credit cards, for example, should be manageable. However, it is possible for you to become a first-time buyer and landlord. 
 
Your age might be a consideration because you will normally need to be under the age of 70 or 75 when the mortgage term ends. If you’re 45 you could take out a 25-year mortgage, but if you’re 60, you might typically be offered a 10-year mortgage which would increase your interest payments. However, we will be happy to advise you about flexible options available to accommodate the requirements of landlords over 50. 
Things to think about 
You might have periods without tenants living in your property so you will want to be confident that you can manage a period without this rental income. 
 
Like your own home, there will be repairs and maintenance, so some of your rental income should be held in reserve to pay for a new boiler or roof repairs for example. 
 
You should also consider the possibility that the value of your property could fall if you plan to sell it later to repay the capital sum. If you sell your rental property for more than you bought it for you should also be aware of the capital gains tax implications. 
*The Financial Conduct Authority do not regulate buy to let mortgages. 
*Your property may be repossessed if you do not keep up repayments on your mortgage. 

Contact AJM Financial for mortgage & protection advice 

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