Buy To Let Mortgages

Taking your first steps to become a rental property owner and landlord is a major move forward in your life, and a good way to increase your monthly income. The whole process should be exciting, so don’t let the stresses of finding financing get you down. We can work with you to explain any potential issues that could arise, so you can be prepared to tackle them head-on. We can walk you through all the different options you have to find a mortgage solution that works for your lifestyle and financial situation. And we will help take the stress and uncertainty out of the process and guide you through it from the very start to the moment you get the keys to your new property. 

A brief explanation

A buy to let mortgage is a mortgage for landlords who are looking to purchase a property to rent out to tenants. There are a few criteria required for buy to let financing, including:

  • Wanting to invest in flats or houses
  • Understanding the market and the risks of investing in property
  • Already owning your own home, either with or without a mortgage
  • Not being stretched too thin on other borrowings, such as your credit cards, for example
  • Earning a minimum amount of money per year

Securing a loan for a buy to let property

When it comes to securing a loan for a buy to let property, the deposits and interest rates are typically higher than they would be for residential mortgages. They are also usually interest-only loans, meaning you only need to pay the interest charged for the term of the loan until you repay the amount owing in full at the end of the term. This often makes the monthly payments less than a standard mortgage, however the fees associated with buy to let mortgages are usually higher. 

Your home may be repossessed if you do not keep up repayments on your mortgage

Buy To Let Mortgages and Tax

There are various types of tax you will need to account for when buying a buy to let property, so keep this in mind when working to find a mortgage.

Capital Gains Tax: 

If you sell your property for more than you bought it for, you will have to pay a capital gains tax. For those who are a basic rate taxpayer, the CGT on your buy to let property is charged at 18%. For those who pay a higher or additional rate of tax, the CGT is charged at 28%. Any gains you make from selling your property should also be declared on your Self Assessment tax return for that year. 

Income Tax: 

The rent money you receive from your tenants each month, also known as your rental income, is taxable. You must declare any rent you get on your Self Assessment tax return for that year. For basic rate taxpayers, the income tax charge is 20%, for higher rate taxpayers, it’s 40%, and for additional rate taxpayers, it’s 45%. You can minimise the tax by deducting allowable expenses, like council tax, property repairs and maintenance, and direct costs like advertising for new tenants. 


Mortgage Interest Tax Relief: 

You can get tax relief for finance costs, including mortgage interest, interest on loans to buy furniture, and any fees you have to pay when taking out mortgages or other loans related to your buy to let property.