There are some key considerations when entering the BTL market. Below we answer some of the questions most frequently asked by our clients.
Can I remortgage my BTL?
Most people can remortgage their BTL when they want a new remortgage deal. Even if your circumstances are unusual lenders may still consider an application.
Should I remortgage my BTL property?
The main reason to remortgage your BTL is to save money on your monthly payments. There are a few instances when you should not remortgage. If you would have to pay a penalty or early repayment charge for leaving your current lender or if interest rates have gone up.
Can I rent out my current home?
The answer is yes you can but you would need to do one of the following:
- You will need to remortgage and put your property on a buy to let mortgage.
- Ask your current lender for their consent to let your property out. This may involve a fee or switching your mortgage to a higher rate than what you currently enjoy. Not all lenders will agree to consent to let in which case a BTL remortgage may be your only option. If you do decide to remain with your current lender, you must inform them that you intend to let your home. Failure to do so could be deemed as a breach of contract.
You may require some equity from your current home to fund a new purchase, you can do so during the mortgage process, provided that you have sufficient equity and meet lender criteria.
Will I need a tenancy agreement?
Normally, if you are a private landlord and the property that you are renting will be your tenant’s home, you will need an Assured Shorthold Tenancy (AST). When you apply for a buy to let mortgage, the mortgage lender will expect you to have an AST and may even ask you to produce a copy.
Can I purchase a buy to let property as a first-time buyer?
Yes, but you could find that options are limited when it comes to securing a mortgage. Most lenders would expect you to be a homeowner or have owned a property previously.
Should I choose a repayment or an interest-only buy to let mortgage?
What is an interest-only mortgage?
An interest-only mortgage is when your monthly mortgage payments only cover the interest owed. You will need to repay the capital borrowed at the end of the mortgage term, usually from the sale proceeds of the property.
The majority of BTL mortgages are perhaps arranged on this basis because the monthly outgoings are less but it doesn’t mean this is the right option for you.
What is a repayment mortgage?
This method will repay some of the capital borrowed each month in addition to the interest charged. If you maintain payments for the full term your mortgage will be repaid in full.
We would discuss your requirements with you in terms of what you want to achieve and then set up your mortgage on that basis.