Understanding Buy to Rent Mortgages

Posted by paul walker on May 27th, 2023

Introduction

Buying a property to rent out has become a popular investment option for many people. However, the process of getting a mortgage for this purpose can be quite different from a standard residential mortgage. This is where a buy to rent mortgage comes into play.

What is a Buy to Rent Mortgage?

A buy to rent mortgage is a type of mortgage that is specifically designed for landlords who want to purchase a property to let out. The mortgage lender will take into account the potential rental income of the property when deciding whether to lend to you and how much they are willing to lend. This means that the amount you can borrow is based on the rental income you expect to receive, rather than your personal income.

How Does it Work?

When you apply for a buy to rent mortgage, the lender will assess the rental income that the property is likely to generate and compare it to the mortgage payments you will have to make each month. To be eligible for a buy to rent mortgage, you usually need to have a deposit of at least 25% of the property’s value.

The interest rates on buy to rent mortgage can be higher than on standard residential mortgages, but this is because they are considered a higher risk for lenders. However, with the right property and a good rental income, a buy to rent mortgage can be a great way to invest in property and generate a passive income.

Conclusion

At Prestige Mortgage Solutions, we understand that every client has unique circumstances, and we work hard to provide bespoke mortgage advice tailored to your individual needs. Our expert team will help you navigate the buy to rent mortgage process and find the most suitable mortgage deal based on your affordability, deposit, and credit history. We pride ourselves on our excellent customer service and commitment to treating our customers fairly. Contact us today to start your mortgage journey.