Also known as investment mortgages or BTL mortgages, it can be a good long-term investment option, but there are risks which need to be seriously considered. You could end up making much more money from your spare cash than you would with a savings account or a pension, but you could also lose a lot of time and money.
What is a buy-to-let mortgage?
A buy-to-let mortgage is designed for borrowers who want to buy a property, to let out to a third party (e.g. tenants).
Can I afford a buy-to-let mortgage?
First things first, you need to be able to afford the mortgage on your own home comfortably, and only then should you consider borrowing a big loan for another property. Often, you will need to own your home to be allowed a buy-to-let mortgage.
What to look for in a buy-to-let mortgage
Successfully getting a buy-to-let mortgage depends largely on the lenders, who scrutinise many applications to ensure their money is safe. However, it is also imperative that borrowers strongly scrutinise the lenders in return, to ensure they get the best deal possible.
Buy-to-let mortgage repayment options
There are three options for you to choose from in repaying your mortgage, these are: repayment, interest-only, or a combination of the two.
Types of buy-to-let mortgage
Buy-to-let mortgages carry some differences, such as higher interest rates and fees, and buy-to-let mortgage lending is generally not regulated by the Financial Conduct Authority (FCA), leaving you more at risk of encountering problems. Each has its own benefits and negatives. You will have to shop around, consider all types of buy-to-let mortgages, see what is on offer, and work out which one benefits you the most.