BUY TO LET MORTGAGES
A buy-to-let mortgage is a mortgage sold specifically for those who buy property as an investment, rather than getting a mortgage for somewhere they want to live themselves.
Buy-to-let mortgages work differently to standard residential mortgages. So, if you’re choosing to rent out your property, lenders will prefer you to finance your purchase with a buy-to-let mortgage.
At Canaan Finance we understand that purchasing a property to let requires specialist advice. We believe that your journey should be one of expertise, choice and simplicity.
Whether you are considering a buy-to-let for the first time or you are an experienced landlord, we will ensure that you get the right advice and guidance.
HOW DO BUY TO LET MORTGAGES WORK?
Buy-to-let mortgages are a way for existing investors and new landlords to take their first steps into the rental property market.
Put down your deposit
The minimum deposit for a buy-to-let mortgage is typically higher than a standard, residential mortgage. This is usually at least 25% of the property’s value (but can vary between 20–40%).
Most borrowers take out an interest-only mortgage for their chosen property. This way, you’ll pay the interest each month but not the full capital amount.
Pay back full amount
At the end of the mortgage term, you’ll repay the capital debt, which is the full amount of the mortgage. Often, borrowers might save into an ISA to repay the capital, or sell the investment property to pay off the debt.
BUY TO LET MORTGAGE COST
How much your buy-to-let mortgage will cost you will depend on several factors. The main ones are:
Size of your deposit: The bigger deposit you can put down, the smaller the mortgage you’ll need to borrow. Lenders will usually ask for 25% of the property’s value, although it can be higher
Interest rate: You’ll only pay back the interest each month, not the full capital amount
Loan term: You’ll pay back the full cost of the mortgage at the end of the loan term
With a buy-to-let mortgage, you’ll only usually pay the interest each month, not the full capital amount. But while this might mean your monthly repayments are cheaper than a standard residential mortgage, you’ll need to consider how you’ll repay the full cost of your mortgage debt at the end of the loan term.
To get an idea of your buy-to-let mortgage eligibility and affordability, we can work out what your repayments will cost you each month. This will be based on how much you’re borrowing, the interest rate and fees of your mortgage deal, and how long you’ll have to pay it off (the term).
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