Buy to let mortgages

UK Buy to Let Mortgages have been becoming increasing popular, in fact since 2000 the number of Buy to Let Mortgages taken out have increased from 70,000 to 800,000 in 2008.

It has also become much easier to take out a Buy to Let Mortgage as many high street lenders offer this type of mortgage. If you shop around for the best buy to let mortgage deal you could be looking at a rate which is only slightly over base rate.

Example Buy to Let Mortgage

* 75% LTV
* Annual Income min £25,000
* Annual Rental Income min £125% of annual mortgage payments (based on an interest only) of initial mortgage chosen.

Fixed Rate Options Available

* Fixed Rate of 5.99% until 31/7/2012 - then 2.49%
* Fixed Rate of 6.19% until 31/7/2012 - then 2.49%
* Fixed Rate of 4.99% until 31/7/2011 - then 4.99%

All of which may also include a product fee.

So if you chose to take a Buy to Let Mortgage on a property with a purchase price of £100,000 then you would need to pay a deposit of £25,000.00 and have a mortgage amount of £75,000.00.
If you were eligible for the Buy to Let Mortgage Rate of 5.99% fixed until 31/7/2012 then your initial monthly repayments on a interest only mortgage would be around £377.66 per month meaning that if you stayed on the same mortgage and dropped to the rate of 2.49% for the remaining 22 years then you would repay £55,539.13 in total over the 25 years. However, the 2.49% rate is a variable rate and so it is probably not very likely that the rate would stay this low for the full 22 years. If you wanted to keep the house at the end of the term you would still need to find £75000.00 to pay the Mortgage Company, or if you have chosen to sell the property then you would have needed to already have the sale completed by the end of the Mortgage Term.

As with any loan, always read the small print and ensure that you understand the Terms and Conditions. If you do not keep up the repayments on your mortgage or any other loan secured on your property, you could have your property repossessed.

where to now? Fixed Rate Mortgages Help Your Credit Rating Mortgage Calculator

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Updated on 6th March, 2009

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