With a buy to let mortgage many lenders will now base the amount of advance they are prepared to lend solely upon the rental income that a property is expected to achieve.

Lenders will usually require the rent to be 125% of the mortgage payment. However, some lenders will allow the rental income to be equivalent to 100% of the mortgage payment or take other income into consideration (employment, investment, pension income if their is a shortfall in the rental income.

At Mortgage Sense we will find the best solution to fit your needs and requirements

Example:

If your monthly mortgage payment to a lender is £500pm then the rental figure would have to be £500x 125%=£625pm. However, some lenders will consider lending on a rental yield that matches the mortgage payment.

Before you purchase a property on a buy to let basis you should consider

Area & Tenant

• Area that you wish to buy in
• Demand in the area for property
• Type of tenant you will rent to ( council, students, professional)
• Expected rental income from the property
• You will need to check carefully that your proposed property
  and tenant is acceptable to your lender (some lenders refuse to lend
  on ex council property, and / or DSS tenants).

Deal

Consider what type of deal you wish to have

• Fixed, Discounted or tracker
• Do you want to repay your mortgage on a Capital and Interest basis
  or Interest only basis
• Do you want to be able to make overpayments on your mortgage.

Other Matters to Consider

Allow yourself a surplus emergency fund as this will allow you to

• Carry out any repairs or alterations to the property
• Allow you a fund for periods when the property is not rented out (change of tenants)

Be aware of the tax implications of owning the property

If you require any assistance please contact one of our experienced mortgage advisors who will be able to assist you with your enquiry.