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Buy-to-let mortgages work in a very similar way to other mortgage products in that the mortgage loan is secured against a property and you will need to make monthly repayments to repay the loan over a predetermined timeframe.
But-to-let mortgages allow individuals to build up a property portfolio and become a private landlord. In order to be approved for a buy-to-let mortgage you will need to have sufficient capital to use as a deposit.
Where buy-to-let mortgages differ is in their impact on you. When you secure a property which you subsequently let to tenants, you become a landlord. Being a landlord means you have certain legal requirements which you must meet. The legalities differ depending on the type of tenancy that you offer, as a guide you should:
In summary, buy-to-let mortgages are very straightforward but becoming a landlord is a significant step and has additional legal consideration that you must meet. It is the landlord element of buy-to-let which makes the investment risky in the short term. Long term risks are more fiscally related to the mortgage amount and future price of the property. As with all investments, there is no guarantee that you will get out what you put in. It is also worth noting that there is no fall back or body which will support you if things go wrong, as a landlord you are pretty much on your own.
In our next buy-to-let mortgage guide we look at the budget considerations that are key to a successful buy-to-let investment.
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