Mortgages for Landlords
Our Landlord Mortgage Service
"The essence of the Fair Mortgages service is professional independent mortgage and protection advice brought to you by a team of specialist advisers and experienced administration support.
As your mortgage is such an important transaction, good advice is imperative.
Compare the latest Mortgages for Landlords
If you want to buy a property to rent out as a landlord, you will need a specialist mortgage for landlords, known as a buy to let mortgage. The key difference between a buy to let mortgage and a standard residential mortgage is that the lender will take into account the income that you expect to receive in rent when they calculate the affordability of the mortgage.
Getting the best mortgage deal for landlords
When you are looking for mortgages for landlords, there are a few key points that you should bear in mind during your search:
- Higher deposit – Mortgages for landlords will usually incur a higher deposit that the average residential mortgage deal of the same amount. As an example, you will usually need to pay a deposit of at least 20% of the property’s value in order to secure a landlord mortgage, while standard residential mortgages can requires a deposit of as little as 5% of the property’s value in some circumstances.
- Higher fees – Mortgages for landlords are likely to incur higher interest rates and arrangement fees, so it is essential to take these costs into account when planning your budget for a landlord property purchase.
- Maximum loan amounts – Many mortgage lenders who specialise in mortgage deals for landlords will offer mortgages up to a set amount only.
- Maximum property portfolio size restrictions – Some buy to let mortgage lenders may only offer landlord mortgages on a property portfolio up to a certain size.
- Affordability calculations based on rental income – When calculation affordability when deciding whether or not to offer a buy to let mortgage, landlord mortgage lenders will take the rental income that you expect to receive into account, along with the usual factors such as your own income, deposit size, and type of property you want to buy. You will need to show the lender that the anticipated market rate for monthly rental income on the property you want to buy is around 125% of the monthly mortgage repayments.
Mortgages for Landlords – Other costs to think about
If you are planning on becoming a landlord for the first time, your landlord mortgage deal is by no means the only financial outlay that you will need to take into account. You will also need to make sure that you have planned for the following expenses:
- Letting agent fees.
- Maintenance and upkeep
- Annual safety checks
- Landlord insurance and rental insurance
- Stamp duty
- Income tax on rental income earned – rental income needs to be declares on your annual self-assessment form
- Capital gains tax (CGT) when you sell the property – unlike your primary residence, a property that you rent out is not exempt from capital gains tax Inheritance tax.
Choosing a rental property
Some factors to consider when choosing property as a landlord include:
- The size of the property – some mortgages for landlords will not be available on properties below a certain size. For example, getting a landlord mortgage for a studio flat can sometimes prove difficult as it will need to be at least 30 square metres in size as well as having a separate bathroom and kitchen area – criteria that are not met by all studio flats.
- The location of the property – some mortgages lenders will not lend to landlords who want to buy a property above commercial premises. This is because noise or other disturbances are considered by many lenders to adversely affect the resale potential of the property.
Our dedicated whole of market mortgage team can help you to locate the right landlord mortgage deal for you – call us today on 0117 313 7780 or request a callback.