Unlike a residential mortgage where you are buying the property with a view to living there and paying the mortgage from your salary, a buy to let mortgage allows you to rent out the property and earn money from the rent paid.

With around 40 lenders offering hundreds of different buy to let mortgage products it's important to find the mortgage deal that's right for your circumstances. An independent mortgage broker such as Mortgages for Business can help you make your way through the buy to let mortgage maze.

There are two basic types of buy to let mortgage to consider: a repayment buy to let mortgage or an interest-only buy to let mortgage.



Repayment Buy to Let Mortgages

A repayment buy to let mortgage is usually most suitable if you are setting up a small property portfolio (typically 1-4 properties) or if you plan to use the property as an alternative pension plan.



Interest-Only Buy to Let Mortgages

Interest-only buy to let mortgages are suited for the kind of investor who is looking to build a large property portfolio.

This strategy enables the investor to re-gear their property capital as necessary to increase their property portfolio. An interest-only buy to let mortgage also allows the investor to manage rental voids if the property is untenanted. Additionally, once property values have appreciated sufficiently, an interest-only buy to let mortgage allows the investor to re-gear their property capital.

Although interest-only buy to let mortgages are often not looked on as such as good deal as a repayment mortgage, an independent buy to let mortgage broker will be able to advise whether this is the better buy to let option.



Buy to Let Mortgage Calculations

Whichever type of buy to let mortgage you choose, your buy to let mortgage lender will base the mortgage repayments on a rent-to-interest calculation.

Unlike a residential mortgage, where the total amount lent is based on the ability to pay the mortgage from your salary, a buy to let mortgage is based upon your ability to pay the mortgage from rental income. This means you need to work out in advance how much the rent is likely to be, and whether the incoming amount will also cover other costs such as landlord house insurance.

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