Buy to Let Mortgages | Leicester

A buy to let mortgage is different to a standard residential mortgage, such as a mortgage you would arrange as a first time buyer or home mover for example. This is because it’s an additional property to your residential property and not one you will occupy. As you will not occupy the property, you present as a higher risk and therefore you will need special terms. At Mortgages by Anna, based in Leicester, we can advise you on the steps you need to take.

Last Updated: 20th July 2023

Understanding Buy to Let Mortgages

A buy-to-let mortgage is a specialised type of mortgage designed for individuals who want to invest in residential properties to generate rental income. Unlike standard residential mortgages, which are intended for owner-occupied properties, buy-to-let mortgages are specifically tailored for property investors. If you're considering entering the world of property investment and becoming a landlord, understanding the key aspects of buy-to-let mortgages is essential.

What deposit do you need for a buy to let mortgage

Lenders will typically ask for a deposit of 25% for a buy to let mortgage. As you are not the occupier of the property, lenders will see a buy to let mortgage as a higher risk. Therefore, they require more equity up front. Some lenders may require as much as a 40% deposit, again depending on the value of the property and other circumstances.

What is the difference between a buy to let mortgage and residential mortgage?

Typically, a buy to let mortgage will be an interest only mortgage. This means that your monthly payments will simply cover the interest on the mortgage, resulting in your capital debt staying the same throughout the mortgage. Whereas, with a residential mortgage, you will reduce the debt as you make more payments. As explained above, you will also be expected to place a larger deposit on a buy to let property and pay a higher rate of stamp duty.

Why do you need a buy to let mortgage?

If you are planning on purchasing a property to let out, you will have to arrange a BTL mortgage. A standard residential mortgage will not permit you to sublet the property under any circumstances. This is a higher risk to the lender and therefore special terms will need to impose, such as the higher deposit.

Anna has significant experience in the buy to let mortgage industry with several clients in Leicester, having large portfolios to manage and maintain. If you would like to discuss your buy to let options, simply get in touch to arrange a chat on 0116 3262610 or submit a contact form below.

Not all Buy to lets are regulated by the financial conduct authority.

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