Whilst they may be similar to residential mortgages, there are a number of differences between them and buy-to-let mortgages – including the size of the deposit that you’ll need to put down.
Buy-to-let mortgages require a bigger deposit as they pose a bigger risk to lenders and that’s why they’ll ask for a bigger deposit and will likely charge more interest and look at your application under different criteria.
How much will I need?
The minimum deposit needed for mortgage arrangements on buy-to-let is usually 25 per cent of the property’s purchase price, but this does vary, often between the 25-40 per cent mark.
If a buy-to-let property purchase price is £285,000, you will need at least a 25% deposit of £71,250.
To secure this property as a buy-to-let, you will need to charge rent at 25-35% higher than your mortgage payments.
The bigger your deposit, the better the deals on offer to you will be, and fixed interest rates tend to be lower to those that are borrowing less, though they can come with big fees and charges, so it’s important to speak one of our advisers that will be able to search the whole of the market to find the right product for you.
If you’re thinking about becoming a landlord, or have inherited a property that you want to let, contact one of our specialist advisers on 02380 642 018 and they will be able to talk you through the next steps.