Buy-to-Let Mortgages
A buy-to-let mortgage enables an individual or entity to purchase a rental property with a loan secured on that property. The purposes of the borrower are to generate income and to obtain long-term capital growth on the investment.
There are also many risks associated with buying-to-let. There is no certainty that property prices will continue to rise in the future or that there will be a steady demand for rental property. In common with the house purchase market, the buy-to-let market has 'hot spots' where there is great potential for rental properties and areas where demand is significantly lower.
Most mainstream lenders are prepared to offer buy-to-let mortgages, though usually subject to more restrictive criteria than conventional residential mortgages. In addition, there are many specialised lenders that offer tailored buy-to-let products.
The main difference between a buy-to-let mortgage and a standard house purchase mortgage is that the lending criteria for the former will normally be underwritten on the basis of projected cash flows from rents to be paid by tenants. The applicant's personal status will also be considered of course.
The Financial Services Authority does not regulate some forms of Buy-to-Lets.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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