Buy to Let Mortgages

Buy-to-let (BTL) mortgages have been on offer in the UK since the late nineties; they are specifically designed for investors to borrow money to purchase property in the private rented sector in order to let it out to tenants.

Lenders take different approaches. The amount of money investors can borrow is determined by the rental valuation of the property. Usually the annual rental income has to cover a certain percentage of the mortgage repayments, somewhere between 120% and 150%. This is to allow surplus rent to cover other costs such as property maintenance and void periods (periods when there are no tenants living in the property and therefore no rental income).

Other lenders will offer a three times' salary multiple and half the rental income.

Others base the amount that they will lend on your salary and the existing loan commitments that you have, but then apply the 'deduction rule'. This means that they will lend up to 3.5 times your income (or whatever salary multiple applies), minus a representative figure for annual mortgage payments worked out at a pre-set level of interest. Say you earn £40,000 and have an outstanding mortgage balance on your property of £120,000. Under the rule, the annual mortgage repayments may be calculated as £10,000. This would be deducted from your salary to leave £30,000, which is then multiplied by 3.5 to give £105,000 - the amount that you are able to borrow.

Typically the interest rates that are offered on BTL mortgages are fairly close to residential mortgage rates but will on average be higher and typically charge higher fees. This is due to the perception amongst banks and other lending institutions that BTL mortgages represent a greater risk than residential owner-occupier mortgages.

This type of investment has become very popular in the UK over the last five years or so, as house prices have dramatically increased. Another reason for their popularity is the tax advantages that are available to UK BTL investors. Rental income is considered in the same way as salary, and is therefore often taxed at 22% or even 40%. However, landlords can deduct costs from the taxable portion of their rental income, and these costs can include the interest portion of their BTL mortgage repayments as well as maintenance costs on the property. This tax set-up has made BTL investments more popular over the last few years.

UK Mortgage Best Buys - cheap mortgages Base Rate Trackers LenderName Rate Duration BaseRate MaxLTV TieIn   Lloyds Bank Remortgage 60-75% 1.99% To Nov 2015 3.99% NA No Overhang Tesco Bank Remortgage 1.75% To Dec 2015 4.24% NA No Overhang TSB Purchase 75 1.79% To Nov 2015 3.99% 60% No Overhang Post Office Mortgages Tracker 1.94% To Dec 2015 0% 60% No Overhang HSBC Special 2.13% term 3.94% NA No Redemption Buy to Let LenderName Rate Duration BaseRate MaxLTV TieIn   Hinckley & Rugby BS BTL 3.24% 2 years 5.64% 60% No Redemption Principality BS BTL 2.59% To Oct 2015 4.99% 60% No Overhang Virgin Money BTL Percentage Fee 2.99% To Jan 2016 4.99% 60% No Overhang Woolwich (Barclays) BTL 3.29% To Jan 2016 3.89% 60% No Overhang Leeds BS Buy to Let 3.29% 2 years 5.99% 70% No Overhang Discount LenderName Rate Duration BaseRate MaxLTV TieIn   HSBC Special 1.69% 2 years 3.94% NA No Overhang Holmesdale BS 2.29% 2 years 4.89% 75% No Overhang Marsden BS 3.89% To Dec 2015 5.95% 90% No Overhang Skipton BS Purchase 2yr 1.78% 2 years 5.49% 60% No Overhang Cumberland BS 2.26% 3 Years 4.49% 60% No Overhang Fees Free LenderName Rate Duration BaseRate MaxLTV TieIn   Virgin Money Everyday Purchase Trackers 2.34% To Jan 2016 4.79% 70% No Overhang Halifax Remortgage 0-75% 2.49% To Nov 2015 3.99% NA No Overhang HSBC Fee Free 2.49% To Jan 2016 3.94% 70% No Overhang First Direct Repayment Fee Free 2.79% 3 years 3.69% 65% No Overhang Yorkshire BS 3.89% To Nov 2023 4.99% 75% No Overhang First Time Buyer LenderName Rate Duration BaseRate MaxLTV TieIn   First Direct Repayment 4.39% 5 years 3.69% 90% No Overhang First Direct Repayment BRT 3.99% Term 3.69% NA No Redemption Yorkshire BS Branch Only 4.34% To Nov 2015 4.99% 90% No Overhang Chelsea BS Branch Only 3.54% To Dec 2015 5.79% 90% No Overhang HSBC Special 3.59% To Jan 2016 3.94% 90% No Overhang Fixed LenderName Rate Duration BaseRate MaxLTV TieIn   HSBC Special 1.49% To Jan 2016 3.94% NA No Overhang Chelsea BS 60-65% LTV 1.99% To Dec 2016 5.79% 65% No Overhang Norwich & Peterborough BS Fixed Help With Fees 3.84% 10 years 4.99% 75% No Overhang West Bromwich BS 1.48% To Nov 2015 5.84% 60% No Overhang Yorkshire BS 2.59% To Nov 2018 4.99% 65% No Overhang Flexible LenderName Rate Duration BaseRate MaxLTV TieIn   Yorkshire BS 2.09% To Nov 2015 4.99% 75% No Overhang NatWest Purchase 2.17% To Dec 2015 4% 60% No Overhang Nationwide BS Purchase Trackers 1.94% 2 years 3.99% 60% No Overhang First Direct Repayment BRT 2.13% Term 3.69% NA No Redemption Lloyds Bank Purchase 60-75% 1.79% To Nov 2015 3.99% 60% No Overhang Offset LenderName Rate Duration BaseRate MaxLTV TieIn   Chelsea BS Offset 60-65% LTV 1.84% To Dec 2015 5.79% 65% No Overhang Norwich & Peterborough BS Tracker 2.54% 2 years 4.99% 75% No Overhang First Direct Offset 2.69% 3 years 3.69% 65% No Overhang Beverley BS Offset 2.39% 2 years 4.75% 75% No Overhang Yorkshire BS Offset 1.86% To Nov 2015 4.99% 65% No Overhang Remortgage LenderName Rate Duration BaseRate MaxLTV TieIn   Lloyds Bank Remortgage 60-75% 1.99% To Nov 2015 3.99% NA No Overhang TSB Remortgage 60-75 1.79% To Nov 2015 3.99% NA No Overhang Chelsea BS 60-65% LTV 1.64% To Dec 2015 5.79% 65% No Overhang Tesco Bank Remortgage 1.75% To Dec 2015 4.24% NA No Overhang West Bromwich BS 1.48% To Nov 2015 5.84% 60% No Overhang Variable LenderName Rate Duration BaseRate MaxLTV TieIn   TSB Purchase 75 1.79% To Nov 2015 3.99% 60% No Overhang HSBC Special 2.13% term 3.94% 60% No Redemption Yorkshire BS 2.09% To Nov 2015 4.99% 75% No Overhang NatWest Purchase 2.17% To Dec 2015 4% 60% No Overhang Post Office Mortgages Tracker 1.94% To Dec 2015 0% 60% No Overhang

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