Apart from the purpose of the mortgage, a buy to let mortgage, which can also be called an investment mortgage, differs from a standard residential mortgage because a lender will take into consideration the rent you will earn from the property as the primary source of income for affordability purposes.
When considering a buy to let mortgage application, a lender will typically look for a prospective rental income of 145% of the monthly interest payment of the loan, but may also require the landlord to have a minimum personal income e.g. £20,000 per annum, although not all lenders require this.
Because demand in the rental sector is high, an investment property could be an ideal venture for the right person. However, finding the right buy to let mortgage has recently become more complex.
The Financial Conduct Authority (FCA) does not regulate some aspects of buy to let mortgages.
Past performance is not a guide to future performance. The value of property investments and income from them can go down as well as up and investors may not get back the amount originally invested.
The value of a property is generally a matter of opinion and the true value may not be recognised until the property is sold. It may be difficult to sell or realise the value of the property in adverse market conditions.
Borrowers will still be responsible for maintaining the payment of any mortgage in the event that the property is not rented out and therefore may wish to make suitable provision for this event.
We suggest that you seek legal advice and advice on tax issues before purchasing a property to let