How does a buy to let mortgage work?

A buy to let mortgage is a property loan that allows you to purchase or invest in a property and then rent it out to other people. The process of applying is very similar to the application for any mortgage, so it’s sensible to compare the buy to let mortgages on the market before making any decisions.

You can only take out a buy to let mortgage on a property that you wish to use as a rental home, so you must be sure this is the reason for your mortgage application. You will have a choice of interest rates and other terms such as a two-year fixed rate, from a range of different lenders and banks. Assessment of whether you can afford to repay any buy to let mortgage will typically take the following into consideration:

  • Any estimated or potential rental income you can expect to receive
  • Your income and any income of a joint-borrower
  • The value of the property
  • Household expenses and costs such as maintenance charges

Like any mortgage, it’s important to assess whether or not you can afford to cover the repayments and consider every possible eventuality. For example, do you have enough money in savings to cover the repayments if your property had no tenants for a period of time?

You can take out an interest-only or capital repayment mortgage on your rental property. And the interest rates you receive will vary depending on your own personal circumstances. In many cases, especially if you are a first-time landlord, the deposit you need to put down on your property will be higher than a residential mortgage. In addition, you may find that the repayment interest rates are higher. This is often due to the fact that buy-to-let mortgages are viewed as a higher risk for a lender.

Research on mortgage rates is not all you need when considering a buy to let mortgage. It’s essential that you obtain plenty of information about the property and the area in which you want to purchase. Your ability to repay any home loan will probably rely on economic factors in the area, such as how popular it is with renters and access to amenities. In addition, as a buy to let property is often a long term investment, it’s wise to review any possible changes to the property market over a certain period of time. We would also recommend that you seek advice from an accountant regarding the tax implications associated with a buy to let purchase.

One of our expert and qualified mortgage brokers can help you compare buy to let mortgages by presenting you with the most appropriate options for your own individual circumstances. Click here for more information.


Registered in England & Wales, no 5603163
Private Wealth Mortgages Ltd is authorised and regulated by the Financial Conduct Authority. FCA Number: 445980

Private Wealth Mortgages Ltd, Hillreed House, 54 Queen St, Horsham, West Sussex, RH13 5AD

Responsive website designed & developed by