When you require a mortgage for a property you are going to rent out (not live in), you will need a buy to let mortgage. Unlike a residential mortgage, when a bank looks at how much to lend you, they’ll calculate your forecasted rental yield.
Rental yield is the amount you receive from the tenant after your mortgage cost comes out. So, if your tenant pays £1000, and your mortgage costs £900 – your rental yield is 10%.
You’ll apply for funding from a bank. However, you’ll usually need a 25% deposit, as buy to let mortgages are seen as riskier than normal (residential) homes. This is because the lender will consider that if you can’t find a tenant, you’ll probably be paying the buy to let mortgage plus your own.
A buy to let mortgage adviser will be able to help you with your application for a buy to let mortgage, discussing what your current circumstances are, your wealth goals, your investment and any potential pitfalls.
You are more likely to get a ‘yes’ with a mortgage adviser.
If you’re not sure which mortgage is right for you, how much you can afford based on expected rental yield, or whether you meet the lender's requirements, speak to one of our qualified mortgage specialists. They’ll advise you and help guide you through the application process. Just call 03300 583 859.