Buy-to-let mortgages: an introduction

A buy-to-let mortgage is a mortgage for a property you’re renting to someone else, rather than living in yourself.

If you rent out your property, you’re a landlord. As a landlord, you can start charging rent to cover your mortgage repayments and the costs of maintaining your property. Of course, there may be profits to be made, too.

What kind of landlord are you? The type of buy-to-let mortgage you get depends on how you became a landlord.

If you bought a property with the intention to let it out, your mortgage is classed as a business loan, not regulated by the Financial Conduct Authority (FCA). That’s because you’re seen as a professional who needs less protection.

Portfolio landlord means you own 4 or more properties. If you wanted to buy more, you might find your choice of mortgages more restricted, as to lenders more properties means more risk.

Accidental landlord means you decided to let out your property as a result of circumstance rather than design. For example, you’re moving in with a partner, or you have to relocate for work, or you’ve just inherited a property. Your mortgage application will be protected by the FCA and controlled by the same rules as a standard mortgage.

How to apply for a buy-to-let mortgage

Buy-to-let mortgages tend to be more expensive than residential loans. Some lenders don’t even offer mortgages for buy-to-let properties. You can search for buy-to-let deals yourself, or use a broker to search the whole market for you. The majority of the most cost effective loans are “intermediary only” which means you can only get them through a broker. Some brokers charge fees for their services and some don’t, so make sure you check.

If you do use a broker, check how many lenders they have access to as not all of them search the whole of the market. And make sure you know what lenders look for in your application.