Buy to Let Mortgage Services

The Financial Conduct Authority do not regulate all buy to let mortgages.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of pensions and investments can fall as well as rise, you may get back less than you invested.

Whether you are an experienced investor, or new to the Buy-to-let investment sector, speak to Complete Financial Centre about the buy-to-let possibilities.
Many people are attracted by the idea of a buy to let mortgage and with very good reason. It is a great way to help you generate additional income, help towards your pension, set you on your way to becoming a property investor or enable you to leave your loved ones a legacy for the future.
A buy to let mortgage is generally a second property and if this is the case it carries with it when purchased an additional cost in stamp duty, which can be a significant cost, depending on the value of the property. This is a relatively new change in the buy to let market.
Do’s and Don’ts
To ensure that you Buy to Let investment is set up correctly it’s incredibly important to have a qualified and experienced mortgage advisor/broker on board, someone who understands your individual circumstances and who knows the vast Buy to Let market. This way you know that you will get the best deal for you, and the one that will fit in with your personal business plan.
Your advisor can even assist you in deciding what you could achieve going forward investing in the Buy to Let market.
We understand that some people may be looking at number of investment properties and that the type of property and tenants could vastly vary, and that you need a variety of products for those different properties. Here at Complete Financial Centre we have many years’ experience in this market and are always willing to offer advice or answer any queries you may have.
Buy to Let is a great way to invest your money. With rent prices increasing and house prices increasing, property, especially Buy to Let is still a promising long-term return.
In many ways Buy to Let is like a regular mortgage, however, there are a few key differences you need to know about.

There are two types of Buy to Let which are:

1. A business Buy to Let: for properties you purchase with the intention of renting them out to a third party.
2. A consumer Buy to Let: for ‘accidental landlords’.

For more information on how these two differ please do get in touch. Our Buy to Let mortgage advisor will be happy to explain further.

Interest Rates

Interest rates are higher on a buy to let property and some of the reasons for this are because lenders look at properties that you are not actually living in as a far greater risk, there could also be times when you would have a property which was not rented out, such as in between tenants and you would then have what is called a’ rental void’, therefore the mortgage would not be covered, we can explain how to ensure you cover yourself as much as possible against any incidents of this. Most buy to let mortgages are interest only – one of the main reasons for this is that the property investor is looking for the long-term growth, rather than to reduce the loan amount/ and or pay the mortgage off during the term of the mortgage.

Seeking Professional Advice

Whether you are looking to make your first buy to let purchase, expand your portfolio or gain a return from your existing rental property, it really is worth seeking mortgage advice to ensure you find the most suitable products available for you, particularly with the recent changes that have come in, and the further changes that are anticipated. The buy to let market is continually changing it is essential that you understand these changes going forward. Understanding these changes will ensure that you are aware of how profitable your investment could be and how you would like to set up your investment.

Minimum Deposit Requirements by Lenders

The minimum deposit that you would require for a buy to let mortgage is currently 15% of the actual loan value whereas with a residential mortgage it is possible depending on your circumstances to put down a smaller deposit of 5%. Interest rates with buy to let mortgages do however start to become far more favourable with a 25% deposit, but this is a far greater amount that is required as a deposit compared to a residential mortgage. The lenders arrangement fees are also generally higher than a residential mortgage. This is because the lenders are acutely aware that in a downward market that properties can be repossessed and by having a greater amount of equity in the property, (which is achieved by the higher deposits required to a residential mortgage) means that in the event that the lender would have to repossess the property, that they would hopefully be able to recoup their monies.

With a buy to let because it is an investment, you will also have access to different “tax deductible items”, however this side of the buy to let market is changing quite significantly and going forward the mortgage interest payments that you can offset against your rental income will be changing and you will not be able to claim the amount that has been able to be claimed in previous years. You can however deduct such things regarding your buy to let investment as property maintenance, letting agent’s fees, costs associated with setting up the mortgage, insurance to protect the property – this is not an exhaustive list. It is advisable to contact a tax expert to find out what can and cannot be tax deductible to get up to date information.

If you wish for any further information about any of this, please do not hesitate to contact us.

Rates Explained

Buy to let lenders have changed the way that they decide what they can lend to investors and today it is a combination of income from earned everyday income, rental income which will be generated from the property an investor is looking to purchase, the type of interest rate that a client is looking to go with i.e. fixed and how long fixed, variable rate, type of property, type of tenants, the list is extensive and dependant on your circumstances as well as which lender you choose. Different lenders have different criteria; whereas for example one lender will accept a property that is rented out to say six different people who are unrelated, another lender would not accept this.

Interest Only – Needs Regular Review

It is important to note that the majority of buy-to-let mortgages are taken out on an interest only, this means that the rent on the property needs to completely cover the mortgage interest, plus an additional amount as a buffer. With the recent changes coming in or soon to be coming in, the amount that is required as a buffer has increased in many cases and therefore it is even more important that you purchase the correct investment property, in an area where there is a good demand for rental property and that the property will achieve the rental that is required. This is where the help of a buy to let mortgage adviser/mortgage broker is key, as they will be able to guide you in this decision and talk you through what is important and what to look for when purchasing your new investment property or indeed when you are re-mortgaging. It really is important that landlords regularly review their buy to let mortgage finance as they could easily end up spending more than needed by remaining on a low interest rate and/or not switching their mortgage to a better interest rate.

Low Interests Rates Could Mean Higher Profits

Something to consider is that interest rates on buy to let mortgages in today’s market are very low and therefore this means greater profit.

However, you do need to take into consideration that properties do fluctuate in value, and therefore, interest’s rates also rise and fall. But when viewed as a long-term investment, property is a great investment as there is a huge demand for rental property.

Our Experience – Helping with Decisions

As an experienced team at Complete Financial Centre we have first-hand knowledge of these markets and can offer essential advice for first time landlords, who can often be intimidated by the buy-to-let industry, additionally, we are actively involved with our many experienced investors and working alongside them on their investment journey with their property portfolios and to help them make the best decisions going forward with their buy to let properties, whether that it is to keep the amount of properties they currently have and ensure they are on the most suitable interest rates for their circumstances, or to help them expand their numbers. Due to our many years of experience in the buy to let market, which includes being successful brokers for hundreds of landlords we can help highlight the areas that come with a risk. Even though the returns can be big, so are the risks, so never rush into a Buy to let mortgage without first doing your homework!

For any more information about the buy to let market, please don’t hesitate to get in touch.

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