Buy To Let Mortgages (BTL)

Buy to let mortgages allow you to invest in property with a view to renting them out.  They are usually more expensive than normal mortgages.  Ideally, you should own your own home before making an application.  Income minimums should be in excess of £25K per annum to acquire the best deals. Interest rates tend to be higher on BTL. Deposits are normally set higher at up to 25%. Arrangement fees tend to be higher and Lending is linked to commercial income you can expect to receive for the property.  Most lenders will want to see 30% more income expectation than the monthly mortgage payment. Speak to a West Kirby IFA for more details on how to qualify.

Buy To Let Mortgages & Special feature mortgages

Buy To Let Mortgages

Buying your first home

Some mortgages come with in-built options that could help your cash flow or indeed repay your mortgage quicker. 

Cashback

On cashback deals, you are given some cash back when you take out your mortgage. The sums are proportional to the amount you’re borrowing.  Usually this is around 1%.

Pros

  • Gives you a lump sum to help with the costs of furniture and repairs to a new home.

Cons

  • These deals often charge a higher interest rate than other mortgages. 
Offset mortgagesWith this arrangement, your savings are linked to your mortgage. Your savings go towards reducing your mortgage balance each month, so you only pay interest on the mortgage amount, less the amount you have on account. It’s a great choice for people with savings and a positive bank balance every month. Offset mortgages can be on a fixed or variable rate.

Advantages

  • The mortgage can be repaid quicker due to the amount you have saved.  You repay each month as normal.

Disadvantages

  • They are not ideal if you are relying on your savings interest to boost your income.
  • These deals do not typically offer you access to discounted rate deals.

Current account mortgage

These deals are a type of offset. The difference is that your current account and mortgage are merged into one. So if you have a mortgage of £95,000 and £2,500 in your current account, your statement will show that you owe your lender £92,500.

Advantages

  • You have the flexibility of using money in your current account to reduce your monthly payments
  • You’re more likely to be paying off your mortgage quicker than with a standard deal.

Disadvantages

  • These types of mortgages don’t typically offer you access to discounted rate deals.

The option to overpay

Some lenders allow you to pay more than your normal monthly payment.  This allows you to reduce your debt quicker. It’s often 10% of the mortgage.

The option to underpay

This can be used when you face difficulties with the repayments.  An agreement must be made with your lender.  It will mean your repayment interest and possibly term will increase.

The option to take payment holidays

With some mortgages you can take a payment holiday. This means you don’t have to make any payments for a limited period.To help you to explore all of your options we offer an independent mortgage advice service.  Contact Assured Wealth and Estate Planning today to book a FREE review.

You should speak to a West Kirby mortgage advisor about Buy To Let Mortgages before you commit to any product. Our West Kirby financial planning team are all highly trained professionals.

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