Why Buy to Let?

Tamalama

Hello all.

This might seem like a silly question, but what exactly is a buy to let mortgage? we are looking to buy a second property to do up and maybe rent out for a few years, just wondered what teh benefits of getting a buy to let mortgage are over a normal mortgage? I can borrow more on a normal mortgage and you do not need a 15% deposit as you do with buy to let.

Thanks a million, Tam

adr0ck

i think your not supposed to rent out your property on a normal mortgage....probably in the terms and conditions of the mortgage

otherwise.....probably something to do with affordability and risk...most people couldnt afford mortgage on a second property i.e. wage calculation wouldn't give enough....

above is just a guess...someone should have a more definative answer

adr0ck

welcome to mse

Doozergirl

There aren't exactly benefits to a buy to let mortgage. They are more expensive.

You need to tell your mortgage company that the property is a buy to let when you apply and that will affect the product you buy and what they charge you. If you already have a mortgage, you won't have any choice but to have a buy to let mortage anyway as I don't think it is normal to have more than one residential mortgage.

sue_balu

Hi
I think that if your normal income (excluding the rent you hope to get) is sufficient you can ask your current (or another willing) lender to make a further advance on a normal mortgage rate rather than having to get a specific btl mortgage. Of course they would still need to give you written permission to let it out.
I have a normal mortgage on my btl property with written permission. All I had to do was show the lender the tenancy agreement which is an asssured shorthold agreement which they were quite satisfied with. I guess if I defaulted they know they can regain possession within 2 months.
I seem to remember they charged me £25 for their legal dept to check the wording of the tenancy agreement.

I have recently remortgage on my home, changed to a new lender who offered to take on the btl propert as well but we kept it with the original lender (who was quite happy to do so even though we moved the bulk of our mortgage).
The competitive mortgage market helps I guess.
I would advise you to havea non-commital chat with your current or prospective lender.

Good Luck

Tamalama

cheers, this whole thing is so confusing! Where can I get independent financial/mortgage advice about these things? Is there such a thing out there that is free, or do I need to get myself an advisor.

Jim_B_3

A large number of BTL landlords are finding at the moment that the rental returns do not match up well with other (considerably safer investments), and in some cases they are operating at a loss. Have you calculated realistic rental income?

babe_ruth_3

I think you also get some kind of tax relief on the interest payments with a btl.

I'm no accountant though so you would need to check with one first!!

Anyone else know ?

hethmar

I understand you get tax relief on the interest payment, on all maintenance costs and running costs of the btl. You would not get these allowances if you just add to your own homes mortgage.

BobProperty

hethmar wrote:

I understand you get tax relief on the interest payment, on all maintenance costs and running costs of the btl. You would not get these allowances if you just add to your own homes mortgage.

Yes you would if you remortgaged or took out a loan to buy the other property. I'm sure I've done that in the past.

ginger_nuts

hethmar wrote:

I understand you get tax relief on the interest payment, on all maintenance costs and running costs of the btl. You would not get these allowances if you just add to your own homes mortgage.

I remortgaged my house to buy a BTL property .My BTL has not got a mortgage everything is owed on my home mortgage .I get tax relief on the additional borrowing (BTL ) .My interest rate is not the cheapest but I didnt want any tie in .If I sell the BTL I can clear my mortgage without any penalty .