Secure your financial future with a buy-to-let mortgage
A buy-to-let mortgage is a type of loan that allows borrowers to purchase a property and rent it out, typically as a form of long-term investment. Buy-to-let mortgages are different to other types of mortgages in several ways. Lenders tend to consider them to be riskier than a residential mortgage, so they often require larger deposits. The interest rates charged on buy-to-let mortgages also tend to be higher since they involve additional risks for the lender.
With a buy-to-let mortgage using our buy-to-let advisor Birmingham, you will be assessed differently compared to other mortgages. Lenders tend to be more interested in the rental income rather than your salary or employment status.
One of the main attractions of buy-to-let mortgages is that they offer investors an opportunity to diversify their portfolios and benefit from rental income. However, the potential returns must be weighed against the additional risks associated with these investments when deciding whether or not to pursue this type of investment strategy.
If you’re interested in a buy-to-let mortgage, speak to our expert buy-to-let Birmingham advisor team for advice and support you can trust.
What is Top-Slicing?
Top-slicing is the term used where the lender uses the borrower’s personal income to top up a shortfall in the “stress tested” rental.
Lenders “stress test” mortgages to ensure that not only are they affordable now, but would also be affordable if interest rates increased. Unfortunately, this stress testing can mean that your application fails affordability.
One potential solution is “Top-Slicing” whereby a lender will use the borrower’s personal income to top up any shortfall in rent to allow the borrower to obtain the loan amount they require.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Please Note: The Financial Conduct Authority does not regulate some forms of buy-to-let mortgage.
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Mortgages for Buy-To-Let Mortgage
A buy-to-let mortgage is a type of loan that investors can use to purchase properties specifically for renting out. The application process for this type of mortgage may vary slightly depending on the lender. However, typically it will involve an assessment of proof of rent, proof of income, credit history, and other measures to assess the level of risk associated with lending to the applicant. The amount a person can borrow depends upon the rental for the property and the income tax band that the applicant falls into. All of this and more will be fully explained in a simple to understand way by our buy-to-let broker Birmingham team.
After assessing the property’s rental capability, lenders will typically offer a buy-to-let mortgage based on either repayment or interest-only terms. With repayment terms, each month borrowers will pay off some of the principal amount (the capital borrowed) and the interest accrued. Interest-only terms allow borrowers to only pay off the interest accrued each month until a specified date when they must repay all of the remaining debt in full.
If you’re considering a buy-to-let mortgage, RM Mortgage Solutions is here to guide you every step of the way. Get in touch with our experts today.