A guide to Buy-to-Let mortgages

By Furness Building Society

The property investment industry is booming, with a reported 2.66 million landlords across Britain in 2019.

It’s widely acknowledged that in the right circumstances, a buy-to-let property can generate significant financial perks and result in a burgeoning business. 

For those unable to purchase a property outright, a buy-to-let mortgage enables both aspiring and established investors to purchase a property and earn a rental income from it. There’s also the added potential of being able to watch your capital grow as the property increases in value.

There are varying mortgages available to assist you in building a property portfolio and it’s important you get the right mortgage for you and your situation. This guide should serve as a handy reference for those new to the buy-to-let market. We’ll break down everything you need to know before taking the leap to become a fully-fledged landlord.

What is a Buy-to-Let mortgage?

A Buy-to-Let mortgage is when you borrow money from a lender to buy a property that will be leased to tenants on a long term basis, with the average length of a tenancy being six or 12 months. 

 

For this reason, a Buy-to-Let mortgage is very different from a Holiday-Let mortgage, which enables property owners to let out their accommodation to guests on a short term basis only. 

  

It also differs from the residential mortgage you may have on your home. Should you choose to let your own home, even for a short time, you’ll need to speak to your lender who may transfer your mortgage to a Buy-to-Let product. 

 

As with residential mortgages, you can get interest-only and repayment mortgages on a Buy-to-Let property. Interest-only being when your monthly payment covers only the interest charges on your loan and repayment when you also pay back the original capital borrowed. 

What’s the difference between a normal mortgage and a Buy-to-Let?

Who can get a Buy-to-Let mortgage?

How much can I borrow for a Buy-to-Let?

What types of Buy-to-Let mortgages are available?

How much deposit is needed?

What costs are involved in Buy-to-Let?

Next steps

Do you have any questions? Please get in touch with our mortgage team to discuss your Buy-to-Let plans or give us a call on 0800 834 312.