Buy-to-let mortgages are useful for individuals who wish to buy a property in order to rent it out. Most of the terms and conditions for buy-to-let mortgages are similar to that ofregular home loans, but there are some key differences. Some of the major differences are mentioned below:

  • The processing fees in case of a buy-to-let mortgageis usually higher than a regular home loan.
  • All mortgages have a loan-to-value (LTV) ratio. It is the ratio of the loan amountto the value of the asset purchased.In case of regular home loans, the LTV can be up to 100%, i.e. you can avail total financing for purchasing the property.
  • On the other hand, in case of buy-to-let mortgages, the lender would usually ask you to make a minimum deposit of 25% of the property’s value. The greater the deposit you put towards the purchase, the lower your monthly mortgage repayments are likely to be.
  • Interest rates on buy-to-let mortgages are usually higher than regular home loans.The interest rate you pay on your buy-to-let mortgage will depend on the borrowed loan amount, your current financial situation andthe estimated monthly rental income from the purchased property. 

How to apply for a buy-to-let mortgage?

  • The internet has revolutionized the real estate industry in several ways. Therefore, there are a large number of online lenders that offer buy-to-let home loans.
  • Availing the services of online lenders is often far more convenient than dealing with a conventional financial institution. 
  • With online lenders, the entire process of availing a buy-to-let home loan is quick and hassle-free.
  • You can apply for a buy-to-let home loan by filling an online application form and submitting all the required documents online.

When should you opt for a buy-to-let home loan?

  • You wish to invest in houses or flats.
  • You can afford to take the risk of investing in property.
  • You already own a house, whether outright or with an outstanding home loan.
  • You have a good credit history
  • You aren’t stretched too much on your other borrowings, such as credit cards.
  • You are under a certain age. This is because most lenders havean upper age limit, typically between 70 or 75.

Before you opt to invest in a buy-to-let property, ensure that make a note of the following aspects:

  • Don’t assume that your property will always have tenants.
  • There will be times when your property remains unoccupied or the tenants fail to give you the rent.Therefore, it is advisable to have a financial cushion to meet your mortgage repayment.
  • When your property is occupied and you have rent coming in, use some portion of it to top up your savings account.

Availing a home loan with the purpose of investing in a buy-to-rent property is not uncommon and may result in lucrative financial gains for the buy-to-let investors. You can also use home loan EMI calculator to calculate your monthly EMIs. With leading financial institutions, you can not only get fast and efficient services but also the best repayment rates, and that will help you secure the property of your dreams.

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