• Mortgage providers require a higher deposit than for residential mortgages.
• Mortgage providers are interested in your rental income and possibly any other personal income - not your profits. Typically, they will only lend if rental income is 130% of the mortgage payments.
• Buy-to-let mortgages are not regulated by the Financial Services Authority.
Mortgage research and advice
It's worth considering using a mortgage broker but choose a broker who has access to the whole market and special deals rather than a limited panel of providers.
Buy-to-let mortgage considerations
An appropriate mortgage should suit your requirements and circumstances. Considering the following issues will hopefully enable you to identify a mortgage that's right for you.
1. What your rental income is likely to be.
2. Whether you have any other income which is likely to affect the amount you can borrow.
3. Whether you have any debts as this will reduce the amount available to you to borrow.
4. The amount of deposit required.
5. Whether the property is a good long-term investment.
6. The amount you can afford to borrow.
7. The best type of mortgage and interest rate for your circumstances.
8. The way in which interest is calculated and how it will affect you.
9. The manner in which repayments should be made.
10. Whether lump sum payment can be made.
11. Applicable redemption penalties.
12. Whether buy to let insurance is included.
13. Other charges you may be required to pay.
14. The procedure involved if you cannot afford to pay.
15. The tax implications of a buy-to-let mortgage.
16. Whether you will be able to refinance.
17. The small print. Read the terms and conditions of your mortgage and how they apply to you - especially if your circumstances change and you want to live in the property.
