There is a basic criteria for a buy to let mortgage and with our guide below, you can put yourself in the best position to be approved:
Buy To Let Criteria – Who is eligible?
Length of the mortgage – Most buy to let mortgages last between 5 to 35 years with monthly repayments.
Age – The minimum age permitted to take out a buy to let mortgage is 21 years old, which the oldest age allowed to take out such a mortgage is 80 years old at the time of the mortgage’s expiry.
Terms of remortgage – While a homeowner can remortgage their property many times over for any purpose they see fit, a buy to let property may only be remortgaged if the equity released is to improve the property, or if the money released is used to buy another buy to let property.
Income – The borrower needs to have a salary of over £25,000 per year for more than one year at the time of taking out the mortgage.
Maximum you can borrow – Individuals cannot borrow more than £2 million from a buy to let mortgage.
Number of open mortgages – Borrowers cannot have more than 3 buy to let mortgages open.
What is a Commercial Buy to Let Mortgage?
There are two types of buy to let schemes; those in place for properties which will be used for living in (residential properties) and those that will be used as business premises (commercial properties).
In the case of commercial buy to let mortgage schemes, you can often borrow up to around 60-70% of the premises’ overall value, rather than in the case of residential buy to let mortgages, which are almost solely based upon your yearly salary and the expected rent generated by the property.
Commercial buy to let mortgages will often require an initial deposit worth up to around 40% of the property’s total value which can be very expensive and is wholly dependent upon the value of the property rather than the owner’s income. Since commercial properties can be far more expensive, businesses are able to borrow more than £2 million.
How to get the best interest rates
The secret to getting the best interest rate for your buy to let mortgage is to have a good credit score. A good credit rating confirms to the mortgage lenders that you as a borrower have a good history of repaying other mortgages, loans and credit cards in the past. Plus, it reflects that you have a low debt-to-income ratio and therefore are a low risk of defaulting.
An additional way to get the best interest rate is to have a steady flow of income and level of employment. Mortgage providers want to reduce risk so knowing that the borrower has been in their job for a long time and has prospects to earn more is very appealing.
Use a comparison website like Quiddi Compare can be a great way to get the best interest rates. Rather than finding a quote from just one lender, a comparison service allows you to access numerous quotes at once so you can find the best deal for you. Alternatively, you can use our secure mortgage enquiry tool where you can fill in a few basic details and can find the most competitive quote to suit your needs.
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Can you afford a buy to let mortgage? For more information visit Money Advice Service.