Buy to Let Mortgages

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Buy to let Mortgages allow the borrower a first charge loan using an investment residential property as security. The mortgage is set-up so that the property is tenanted out and the mortgage payments are covered by the rent generated by the tenant within the security.

A BTL mortgage can take many forms

  • HMO Mortgage is a conventional buy to let mortgage taken over a security that has multiple tenants. It is referred to as a House of Multiple Occupancy i.e. shared bathing and kitchen facilities.
  • Holiday Let mortgage is a conventional buy to let mortgage on a security that has long-term tenancy restrictions.
  • Portfolio mortgage straddles the border between buy to let lending and commercial mortgages as a loan over multiple properties. In a buy to let form this will take individual loan charges against each property whereas in commercial form a single loan facility can stretch over multiple properties. The former tends to be interest only, the latter amortizing.

The two main forms of buy to let products are:

  1. Interest only products
  2. Capital and interest repayment products

A buy to let mortgage provider will lend to a set percentage of the purchase price of the property and this is generally at the top end (Loan to Value) of alternate forms of finance – as of late 2019 the highest LTV’s available are 75-80%.
As a long-term product the rates often tend to be very competitive and the borrower is provided with a choice of a fixed or variable rate product. A fixed rate product allows the borrower to plan monthly expenditure; a variable rate product holds the advantage of a potentially decreasing monthly payment.

The mortgage could be held in an individuals name or held in a LTD either setup as a Special Purchase Vehicle (SPV) for the sole purpose of holding property or through a trading company.

Refinance

As with most mortgages a BTL can be setup with a fixed period of interest over a set time. Once that period has finished the product will normally revert to the lenders SVR. If you have existing BTL mortgages then we can look at your current situation and see if there are ways of saving you money by refinancing or releasing extra equity from you portfolio.

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