How much will you repay on a buy to let?
Buy to Let Mortgage Calculator
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Buy to let mortgages calculation
If you are thinking of taking out a buy-to-let mortgage as a means of financing the purchase of a house or flat that you intend to rent out, then why not use our handy online calculator as a quick and easy means of working out the cost of borrowing? Alternatively, you can get in touch with one of our advisors, who will be happy to go through the figures with you while recommending the most competitive buy-to-let mortgage product based on your needs.
Key points to consider
While the appeal of equity release is clear, there are some important considerations that must be factored in. Before going ahead, it’s useful to use an online equity release calculator to find out exactly how much of your home’s value you could release. In addition, seeking independent advice from a reputable consultant is mandatory. If you choose to go ahead, you’ll need to bear the following key points in mind:
- The buy-to-let sector is full of tempting investment opportunities that promise excellent returns over an extended period.
- Also referred to as an investment mortgage, a buy-to-let mortgage is a specialist type of secured borrowing product that is aimed specifically at property investors who are looking to purchase a residential building with the intention of renting it out to a third party, such as a social tenant or a group of students.
- Whether you are just starting out as a landlord, perhaps with just a single property, or you are a successful property investor looking to expand your existing portfolio, a competitively sourced buy-to-let mortgage can help to significantly increase your profit in both the short and long term.
- Unlike traditional mortgages, buy-to-let products are quite different in nature, particularly with respect to the lending criteria.
- Here is a brief list of things to look out for and be aware of when applying for one of the many different types of buy-to-let mortgages currently available.
Buy-to-let deposit values
If you are moving home or looking to buy your first residential property, your lender will normally expect a minimum deposit of at least 5%. However, as a buy-to-let borrower, the required deposit amount is going to be somewhat higher—typically around 20% of the open market value of the property, although this figure may fluctuate between 15% and 25%. If you want a better deal on your mortgage, then you will need to think about increasing the deposit up to 40% of the property value, although this usually applies to new-build homes.
Stamp duty
Another element worthy of careful consideration when purchasing a property with a view to renting it out is the stamp duty. On April 1, 2016, the government introduced a 3% surcharge on SDLT (Stamp Duty Land Tax), which you are required to pay by law when purchasing a second home or buy-to-let property.
Buy-to-let mortgage fees
Although buy-to-let mortgage arrangement fees can vary considerably from one lender to the next, it is not uncommon for brokers and finance providers to charge anywhere up to £2,000 or above. If the property is of significantly high value, then this might not be too much of a problem. However, if you only need to borrow a few thousand pounds in order to secure the purchase of a rental property, then you might find this to be somewhat excessive. The advice here is to shop around, as you could save a considerable amount by doing so.
Your monthly salary and expected rental income
When you apply for a buy-to-let mortgage, most lenders will want to see evidence of your monthly income as well as a very realistic figure relating to the amount of monthly rental income that you expect the property to generate. You will normally need to ensure that the rental income equates to 125% of the required mortgage repayment value before your application will be accepted and approved.
If in doubt, ask an expert
Provided you do the required homework and are realistic about the figures, the buy-to-let market can offer many rewards while giving you a highly respectable nest egg for your later years. Of course, as house prices increase, the capital worth of your initial investment will also rise accordingly. Should you have any questions relating to any of the topics raised above or need help and advice with regard to becoming a landlord, you can always ask one of our expert advisors, who will be happy to oblige with any information you require.
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