What is a Buy to Let mortgage ?

A Buy To Let Mortgage is a mortgage loan secured against a property that is rented / let out to a third party(s) by the applicant (borrower) and is not lived in / occupied by the borrower. It can otherwise be known as an investment mortgage, investment property mortgage or a commercial mortgage.

In calculating the affordability of a Buy To Let Mortgage , lenders will make an assessment of the rentability of the property, and assess the expected rental value per month - i.e. how easy they feel it will be to rent the property out, and what the expected / anticipated monthly rental income will be. Different lenders use different rental equations / calculations, but the standard is that the anticipated rental income must equal 125% of the monthly mortgage payment. Some lenders will take the applicants income into consideration also if the rental cover is tight. Although there have occasionally been 90% LTV products available on Buy To Let products, the minimum deposit tends to be 15% (a maximum LTV of 85%).

Most buy to let mortgages are not regulated by the Financial Services Authority.

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