A buy to let mortgage is a mortgage secured against a property that has been purchased with the idea of letting it out to tenants in mind. The property owner becomes the landlord to rent out the property for profit.
Unless youbre a cash buyer, youbll need a buy to let mortgage to rent out a property. The mortgage is based on the fact that youbre not the permanent resident, which means itbs assessed in a different way to standard mortgages. Standard mortgages for residential properties are assessed on the income of the borrower, whereas, buy to let mortgages are assessed by the potential rent income from the property in question.
Interest rates for buy to let mortgages are typically higher than those of standard mortgages, and the deposit you would need to secure the mortgage will be higher, too. Youbll usually need to be able to cover at least 20% of the property value yourself.
Even if youbre thinking of renting out your current home to tenants, youbll still need a buy to let mortgage to do so. This may mean remortgaging your home if youbre switching financial lenders. However, if you do stay with your current lender, you must inform them that you want to rent out your property, or you could be in breach of your contract with them.
Take into consideration other expenses and possible hidden costs before you try renting out your property. Seek advice from solicitors and financial lenders who offer buy to let mortgages.
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