Specialist buy to let mortgages

Find out the latest buy to let mortgage rates

Gain access to great mortgage rates. Take a look at our rates table to see the range of deals.

Rate Product Monthly cost LTV Lender fee APRC
1.28% then 4.24% Fixed for 26 months Fixed for 26 months £106 60% £2,525 4.10% Enquire
1.34% then 5.00% Fixed for 26 months Fixed for 26 months £111 60% £2,178 4.70% Enquire
1.39% then 4.49% Tracker for 26 months Tracker for 26 months £115 65% £2,355 4.30% Enquire
1.39% then 4.49% Tracker for 26 months Tracker for 26 months £115 65% £2,360 4.30% Enquire
1.40% then 4.24% Fixed for 26 months Fixed for 26 months £116 60% £1,525 4.00% Enquire

Buy to let mortgage options for first-time and experienced landlords

We are a specialist broker: discuss anything from standard buy to let to complex HMO

  • Full breakdown of ERC's, APR and fixed rate periods
  • Unbiased mortgage recommendation: we have no ties to any lenders
  • Get a great deal thanks to our comprehensive lender search
  • Access deals up to 85% loan to value
  • No minimum personal income required (rental, pension, investment and part-time income considered)
  • Less hassle for you: our team will process your case to completion
  • Decision in principle from a lender commonly within two hours

Who we can help *:

  • Experienced and inexperienced landlords
  • Applicants looking for lenders with no upper age limit
  • Limited companies, LLPs and SPVs
  • Self-employed borrowers and contractors
  • First-time buyers who are also first-time landlords

* Subject to other criteria

Who are Commercial Trust Ltd?

We can also help with:

  • products with free valuations and solicitor’s costs
  • mortgages with no ERCs (early repayment charges)
  • mortgages for both individuals and limited companies, with up to four-way ownership
  • British nationals living abroad and non-British nationals with three or more years’ residency
  • second mortgages on buy to let properties
  • uninhabitable properties and properties going through probate

Buy to let mortgages explained

If you wish to invest in residential property to let to paying tenants, you cannot use an ordinary mortgage. You will need a specialist buy to let mortgage product instead.

Buy to let mortgages are highly popular with residential property investors in the UK. They allow borrowers to leverage their capital for a profitable return, and can be a sound alternative to traditional savings.

Demand for buy to let finance has soared since it first took off in 1996. By the end of 2014, around 15% of all outstanding mortgages in the UK were buy to let loans. Competition has led to a booming market, with diverse products available to suit all kinds of property investors.

As a specialist mortgage broker, our goal is to find you a great deal on a product tailored to your requirements. Your advisor will undertake a comprehensive search of products from a wide range of lenders.

Buy to let mortgages are based on the rent, rather than personal income

Buy to let mortgages are specialist products that allow you to borrow based on the rented income-generating potential of your property.

So even if you have a low personal income, your advisor can help you. As long as your rental income sufficiently covers your mortgage interest payments, there are lenders who will consider funding your venture.

Lenders use rental income to calculate how much you can borrow. As a lower income limits how much an owner-occupier can borrow, a lower rent limits how much you can borrow against a rental property.

But different lenders use different rental calculations. Your advisor will know where your application will have the best chance of acceptance.

Other key differences from owner-occupier loans:

  • Borrowing criteria. Some buy to let criteria are more lenient than those for owner-occupier loans. For instance, some lenders will allow investors to borrow into retirement, subject to other criteria. A borrower who do not meet typical income requirements may also be able to access finance.
  • Regulation. Most buy to let mortgages are not regulated by the Financial Conduct Authority. (But Commercial Trust is authorised by the FCA to provide buy to let mortgage advice.)
  • Risk weighting. Lenders consider buy to let somewhat riskier than residential mortgages. This means that interest rates and fees tend to be a little higher. It also means that a buy to let borrower needs to pay a larger cash deposit in most cases.

The minimum buy to let deposit is 15% of the property value

Buy to let investors must put down larger cash deposits than owner-occupiers. The most any lender will agree to lend is 85%, leaving the borrower to cover the remaining 15%. (This is an 85% loan to value, or LTV, mortgage.)

Compare low-deposit mortgages

Not all lenders allow borrowing up to 85% LTV. Most lend no more than 70–75% of the property value. And if you want to qualify for products with the lowest interest rates, you will need to borrow no more than 60%.

60% LTV mortgages are more suitable for risk-averse investors who prefer a larger equity buffer. Between the lower interest rate and smaller loan size, they also allow investors to keep their repayment costs down. And if your eventual goal is to have an unencumbered property, 40% of equity gives you a good head start.

Many landlords opt for interest-only mortgages

Data from the Council of Mortgage Lenders suggests that 75% of btl mortgages are on interest-only terms. This means that the borrower repays only the interest each month, while the capital remains level. They pay off the capital in full at the end of the loan term.

The popularity of interest-only loans varies by region. For instance, it is far less prevalent in Scotland and Northern Ireland, where capital gains are less likely. In these regions, more buyers opt to pay off the loan principal as well as the interest.

But interest only remains a popular strategy, even in regions with muted price growth. The reasons for this include cheaper monthly repayments and certain tax benefits.

Interest-only borrowers need an exit strategy

When an interest-only term ends, the borrower must repay the debt in its entirety. There are many ways to do this. How you repay the loan principal at the end of the term is your ‘exit strategy’, and it is wise to plan this ahead of time.

Many BTL borrowers remortgage regularly throughout their loan. This can allow you to switch to cheaper rates or release equity from the property as cash.

Some switch as soon as the introductory period of their mortgage has ended. Remortgaging before this point can be costly, as most lenders levy early repayment charges (ERCs). If you want the flexibility to repay your mortgage early, ask your advisor about ERC-free options.

Remortgaging involves taking out new finance to repay the old loan. But it is not an exit strategy, as there is still debt to repay.

Borrowers will need to clear this debt by other means. In some cases, landlords might sell their property for a profit. Or they might repay the loan with money from other sources, such as equity from other properties.

A repayment mortgage gives you an unencumbered property

A property is unencumbered when there is no loan secured against it. If your eventual goal is to have an unencumbered asset, and you can afford higher repayments, you might opt for a capital repayment mortgage.

Unencumbered properties generate higher profits, because there is no loan interest to pay off. They also generate more proceeds when sold, because there is no capital loan to repay.

Repayment mortgages suit investors who are planning to have either a steady income or a large cash lump sum to support them later in life. They might also wish to leave a mortgage-free property to their children.

Part-repayment, part-interest-only mortgages are also available. These can benefit investors in the following situations:

  • they need to make up a shortfall in an under-performing investment
  • they want to pay down some of their debt, but can’t afford a full repayment mortgage
  • they want to combine the benefits of growing equity and lower repayments

There is no such thing as the'best' buy to let mortgage?

Every investor has different plans and financial goals finding the ‘best’ mortgage is about more than simple rate shopping. It is about finding the most appropriate financial solution for your circumstances and goals.

Our team of skilled advisors will work hard to understand your situation and intentions for the future. Your advisor will match you with a lender based on their criteria and suitability. They will only suggest the most appropriate option, and will provide all the information you need to make an informed decision.

Why use us for your buy to let mortgage application?

Finding the most suitable mortgage takes time, whether you are new to buy to let investment or a seasoned landlord.

With us you get more than mortgage advice. We take a holistic look at all the financial solutions available and recommend a product tailored to your requirements. Our service is end to end, so your advisor will support you right up until the day of completion.

Our advisors are experts in the buy to let market. They can help investors in complex situations, including those who have been turned down elsewhere. They have a detailed knowledge of lender criteria and know where best to place your application to ensure the best chances of success.

Read our UK landlords’ guide for 2017 and beyond

Make sure you stay up to date with the latest changes in buy to let so you can continue to invest your money wisely.

Our buy to let guide for 2017 and beyond helps you navigate and understand the changes that affect the buy to let market. Find out about new tax rules and changes to important legislation that impacts how you run your rental property portfolio from day to day.

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