View today's best Buy to Let deals and find out if L&C could help save you time and money by switching to a better rate
When compiling our Buy to Let best buy tables we compare the best Buy to Let mortgage rates from across the UK market, including deals that are exclusive to us. It's important to remember that the best Buy to Let mortgage deals are not necessarily about getting the lowest mortgage rate possible, you also need to take into account all the fees and charges associated in setting up your new mortgage deal.
By choosing L&C to find your next Buy to Let mortgage deal our advisers will research the market for you, looking at criteria, set up fees and the rate to help you compare the best Buy to Let mortgage deal for your circumstances, saving you time and effort. Our best buy tables above show you the Buy to Let mortgage deals currently available, both fixed rates and variable rates, whether you are looking to purchase or remortgage to a better deal.
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If you want to become a landlord and buy a property to rent out, you will need a Buy to Let mortgage rather than a standard residential mortgage.
Buy to Let mortgages are for people who want to buy a property and rent it out rather than live in it themselves.
Despite recent changes which restrict Buy to Let tax relief for landlords, many people still see renting out property as an attractive way to generate returns. Current low interest rates mean that there are plenty of competitive Buy to Let mortgage deals to choose from.
You can’t apply for a normal residential mortgage on a property which you let out as a landlord. You should therefore talk to your lender if you already have a normal mortgage on the property you want to let out and ask about switching to a landlord mortgage, or seek advice from a Buy to Let mortgage broker if you are buying a new property to let out.
The minimum deposit for a Buy to Let mortgage is usually 25% of the property's value, although it can vary from 20%-40% depending on which deal and lender you go for.
There are lots of different Buy to Let mortgages to choose from, so it’s important you find the best one to suit your individual circumstances.
Seek advice from a broker, ideally one which won’t charge you a fee, who can research the market on your behalf and help you work out which the cheapest buy to mortgage is for you. You can also compare Buy to Let mortgages online.
Look carefully at each deal’s Annual Percentage Rate of Charge (APRC) which shows you how much any mortgage deal will cost you including any introductory rate, the rate the mortgage revert to when the introductory rate finishes and any fees.
When you apply for a Buy to Let mortgage, lenders will look at how much rental income you expect to receive, as well as your own income and other personal circumstances, so you’ll need to think carefully about how much rent you’ll need to charge your tenants.
Lenders will expect the rent you charge to be at the very least 125% of the mortgage payment, but this can vary depending on which lender you go to and many will require rental income to equal 145% of the annual mortgage interest payments. So, for example, if the property you are buying to let out will cost you £11,000 a year in mortgage interest, the lender will need to see that you’re expecting to generate at least £13,750 in rent each year.
Use our Buy to Let mortgage calculator to help give you an idea of what you can borrow based on your expected rental income.
As well as checking your rental income is sufficient, lenders will often have other criteria you need to meet before they’ll offer you a Buy to Let mortgage.
You must usually be aged at least 25 to qualify, and you’ll often need to be earning an annual income of at least £25,000. There’s also often a cap on the total amount you can borrow, although this can be as high as £2m or more. You can’t usually take out more than three Buy to Let mortgages.
As with normal residential mortgages, there are lots of different types of Buy to Let mortgages to choose from.
For example, if you are worried about interest rates rising in future, you may want to consider a fixed rate Buy to Let deal, where the rate is fixed for a certain period so your payments won’t change. Alternatively, you could opt for a variable rate deal, such as a tracker Buy to Let mortgage. These track the Bank of England base rate plus a set percentage.
Other types of variable mortgage deals include discounted Buy to Let mortgages, where the lender offers a discount off its standard variable rate, or capped mortgage rates, where again rates can go up or down but will never exceed a certain limit.
Most Buy to Let mortgages are interest-only, which means each month you only pay back the interest you owe on the amount you’ve borrowed, and not any of the capital.
The main benefit of this is that your monthly mortgage payments will be lower, but the downside is that if property prices fall while you own the property, there is a risk that when you come to sell it, you might not end up with enough to clear your mortgage.
Comparing mortgages isn't easy. Sometimes deals look attractive because they have a low initial rate, but you also need to take into account any fees that come with the mortgage deal. We recommend annual cost as the best way to see which mortgage deal offers the best value for the size of mortgage you're looking to take.
This is how we calculate the annual cost:
By comparing mortgage deals looking at annual cost you can see which one would be cheapest for you taking into account fees as well as the interest rate. The annual cost only applies to the initial deal as its always best to consider switching once the initial deal is over to see if you could save money.
This is the representative APRC provided by the lender
Who is lending the money and what sort of mortgage is it.
The rate you will pay at the start of your mortgage.
Your monthly payment when your mortgage starts, based on the loan amount you entered.
The total of the lender's booking, arrangement and valuation fees.
The annualised cost of this mortgage.