Your home maybe repossessed if you do not keep up repayments on your mortgage.

The FCA do not regulate buy to let mortgages.

Buy to let

Buy to let mortgages are for properties you purchase with the intention of renting them out to a third party. Compared with residential mortgages, lenders like you to have a larger deposit in a buy to let property as it reduces their risk whilst also giving them more chance of recouping their debt should they have to repossess the property.

Buy to let mortgage interest rates are normally higher than a residential mortgage.

Rental income generated by the property is also taken into consideration, and can affect the amount of money a lender is prepared to offer you. In most cases the rent needs to cover 140% of the monthly mortgage payment. However, there are a number of variations on this, and it’s important to discuss this up front, if you’re looking to maximise your borrowing potential.

Mortgage lenders may impose other restrictions or conditions on applications for a buy-to-let mortgage such as a minimum age, being an existing home owner and/or being resident in the UK. The property will need to be in a condition to be let and there may be restrictions on the number of bedrooms, number of floors or number of units in a block. HMO’s (Houses in Multiple Occupation) also have different rules and have separate criteria to standard residential buy to lets, and may or may not be subject to licencing by the local authority.

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