Buy to let mortgage guide

If you want to buy a property to rent out rather than live in, a buy to let mortgage (BTL) can help you get there. But how does a buy to let mortgage work exactly? In this helpful guide, we talk you through what they are, what they mean and how you could get one.

What does buy to let mean?

Buy to let mortgages are designed to help you buy a property, just like an ordinary mortgage, but with some key differences.

For example, with a BTL mortgage, you rent out a property to tenants which creates monthly income (so you can repay the mortgage). The amount you can borrow with a buy to let mortgage will usually depend on how much rent you’re likely to expect from the property.

How do buy to let mortgages work?

Buy to let mortgages are specially designed for residential home owners looking to become a landlord, or add to their existing property portfolio.

Typically, buy to let mortgages are a bit more expensive than a mortgage used to buy your own home. It all depends on the lender.

There might also be times where the property is empty and not generating rent - these are known as void periods. And mortgage affordability will usually depend on the rent you expect to receive, as well as a few other factors related to the property, like maintenance costs, agent's fees, and landlord's insurance, to name a few.

If you’ve got a residential mortgage but need to let it out on a short term basis, you might be able to get consent from your current lender. But bear in mind, you need to contact them first to see if it’s possible.

Who can get a buy to let mortgage?

A buy to let mortgage can be for individuals or limited companies who want to let out a property.

If you have four or more mortgaged buy to let properties, we will class this as a portfolio landlord. So, you’ll be subject to a specialist underwriter who will review your application.

We allow portfolio landlords with a minimum of four mortgaged BTLs, and no more than 10 mortgaged BTL overall (with other lenders).

If you’re a limited company landlord, it’s likely that different lending criteria will apply. You’ll also typically pay a higher rate and have a smaller choice of lenders, as this type of lending is seen as more specialised.

Others who might need to apply for a BTL mortgage are ‘accidental landlords' – those who own their home but decide to rent it out. This is also known as a ‘Consumer Buy to Let mortgage’ and could be for a number of reasons, such as inheritance, divorce or relocating for a new job. If it's for less than a year, you could apply for a Consent to Let. For longer than this period, you might want to think about switching to a buy to let mortgage.

How much deposit for a buy to let property?

You generally need a bigger deposit with a buy to let mortgage than a residential mortgage.

Also, it may be worth looking at our current buy to let mortgage rates online to get an idea of what’s available.

Are business buy to let mortgages regulated by the FCA?

If the aim of getting a buy to let mortgage is to make profit from the rent generated, this is seen as a commercial borrowing and not regulated by the FCA.

However, if more than 40% of the property is occupied by the owner (or their immediate family), then the mortgage is treated as a regulated buy to let. And this is regulated in the same way as a residential mortgage.

Are consumer buy to let mortgages regulated?

Yes, they are. The FCA treats a consumer buy to let like a residential mortgage, so you get the protection that comes with an advised service.

Can I change my mortgage to buy to let?

Yes, you can change a residential mortgage to a buy to let mortgage. If you rent out a residential mortgage, your mortgage conditions will usually say you need to change it to a BTL. It would be worth speaking to your lender or getting professional advice so that you can arrange this. Bear in mind that your lender’s lending criteria will apply.

How to get a buy to let mortgage

Whether you're an experienced landlord – or it's your first buy to let property, Leeds Building Society has a range of BTL mortgages available. As well as helping you purchase a buy to let property, we're also here if you'd like to remortgage from another lender. You could also contact a mortgage broker.

How much can I borrow with a buy to let mortgage?

The amount you can borrow with a buy to let mortgage is calculated differently to most other mortgages. Your mortgage amount is based on how much income you will likely earn from renting out the property that is verified via a rental assessment completed by a independent surveyor.

This will then provide a Interest Coverage Ratio – which determines that your rental income is enough to cover the total cost of your mortgage, and associated fees.

Our buy to let mortgage range

Here's where you'll find our current range of buy to let mortgages:

View our buy to let mortgages

How can I apply for a buy to let mortgage with you?

Apply online: Once you've chosen a Leeds Building Society buy to let mortgage, you can apply on our website. Remember, we don’t provide advice on our buy to let mortgages, so you’ll need to make your own choice about which mortgage is suitable for you.

Use a mortgage broker: A professional mortgage broker can help you navigate the buy to let market. How? Well, they can help find the best deal for you, based on your personal circumstances.

Just make sure the mortgage broker you’ve chosen is authorised by the Financial Conduct Authority (FCA) – you can check using the Financial Services Register.

• Once you’ve contacted a mortgage broker, they’ll usually apply for the mortgage on your behalf.

• Using a broker can save you time - they use their expertise to match you with lenders that work for your circumstances.

• Mortgage brokers may charge fees - so make sure you know exactly what fees and other costs a mortgage broker will charge.

• There are lots of reputable websites out there that can help you search for a mortgage broker!

Apply by phone: If you'd prefer to talk to one of our qualified Mortgage Consultants for your buy to let mortgage, call us to make an appointment.

We'll just need to know the following:

• Your salary and employment details if you’re employed or self-employed

• Existing mortgage details if you currently have a mortgage

• Details of your current financial commitments and loans

To apply, call our buy to let team on 03458 480 026 (and press option 1)

Need support with your buy to let mortgage?

If you'd like some assistance with your application – or you have any questions you'd like to ask – why not speak to one of our Mortgage Consultants?

Call to speak to one of our Mortgage Assistants: 03450 50 50 62 (press option 2).