Buy to Let

Investing in buy to let property is a great way to invest for the future but first you need the right kind of property and, just as important, a good buy to let mortgage deal. So if you require a buy to let mortgage to finance your investment we can help you get it right from the start! Sourcing a buy to let mortgage is not just about finding the cheapest rate or lowest cost deal, it’s also about the specialist advice you’ll get from an experienced mortgage broker.

How does buy to let work?

A buy to let mortgage is a loan secured against a property which you own and intend to rent out to a tenant. You’re buying to rent it out, or in other words, you’re buying to let.

As with a normal residential mortgage, it’s your responsibility to meet the mortgage repayments each month. The big difference is that with a buy to let mortgage, how much you can borrow is based mainly on how much rent the property can earn, rather than your own income.


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How do I get a buy to let mortgage?

Getting a buy to let mortgage: It takes a bit of research, time and patience to make the right decision at every phase of the process.

The good news is that we can do most of the hard work for you.

How to choose a buy to let property

There’s a high chance you already have a city or town in mind for your property.

A lot of landlords prefer to own properties near where they live themselves.

Of course, there are more profitable places in the UK than others.

Getting a buy to let mortgage with a broker

The best way to get a buy to let deal is to seek advice from a local mortgage broker like ourselves. We would say that because that’s what we do.

It’s our job to know the buy to let market inside and out and to use that knowledge to help find you the right deal with the right lender. As brokers, we search a comprehensive range of lenders from across the market and give you a clear picture of the suitable deals on offer.

How much deposit do I need?

As with any type of mortgage, the more you put down as a deposit, the better the mortgage deal you could get. A lower mortgage rate means lower monthly payments and a greater margin between your rental income and your mortgage costs.

As a rule, you’ll need a deposit of around 25% or more of the property’s value, although some lenders will require as little as 20%, provided the rental income is sufficient.

Do I need a tenancy agreement?

Generally speaking, if you are a private landlord and renting a property that will be your tenants’ home, then you’re likely to need an Assured Shorthold Tenancy (AST).

When applying for a Buy to Let mortgage, the mortgage lender may insist that you have an AST and could ask to see a copy.

Are there any property types that are difficult to secure a Buy to Let mortgage on?

Just as you should be doing your research and choosing a property that is suitable to rent out, so, too, mortgage lenders will want to make sure that the property they’re lending against is a safe bet.

While lenders will want to make a decision based on the specific property, its location and the condition it’s in, they will often have general restrictions on certain types of property. We can help you with this.

Do you pay Capital Gains Tax on Buy to Let property?

Yes, if you sell the property for more than you paid for it after deducting costs such as stamp duty and estate agent/solicitors fees. By making a profit, you are essentially ‘gaining capital’, and so the tax applies.

However, as an individual you get an annual allowance to set against any gain.

Do you pay tax on Buy to Let property income?

Yes. The income you receive as rent is taxable. You need to declare any rent you receive as part of your Self Assessment tax return. The tax on your income is then charged in accordance with your income tax banding (20% for basic rate taxpayers, 40% for higher rate, and 45% for additional rate).

However, you can minimise the tax you have to pay by deducting certain ‘allowable expenses’ from your taxable rental income.

Is using a limited company better for tax?

Unfortunately there is no straight answer! It depends on a number of factors such as how many properties you hold, whether you need the income quickly and how long you want to hold the properties for and of course your individual circumstances.

Limited companies are not affected by the new mortgage interest relief restriction which came into effect from April 2017. Interest for limited companies is classed as a business expense and fully deductible against income.

Do you pay inheritance tax on a Buy to Let property?

Yes, Inheritance Tax is payable on Buy to Let properties but the amount changes depending on your circumstances. A Buy to Let property that you own will form part of your estate for Inheritance Tax purposes.

Taxation: We recommended you obtain specific professional advice from an accountant or tax specialist.

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