Buy-to-let mortgages

Buy-to-let mortgages are home loans for people who want to buy a property to then rent to tenants. These types of mortgage buy-to-let products attract a higher interest rate because lenders factor in a commercial element to their charges. 

A buy-to-let mortgage differs from other mortgages because the amount lent to a borrower will be based on the expected rental yield generated by the property. Lenders will normally expect a deposit of at least 20 per cent so most buy-to-let mortgage applicants will already own a property in which they have a large amount of equity.

Most buy-to-let property applicants are looking to secure an alternative income as well as building up equity in a property to help fund their retirement. Some property investors will look at buy-to-let re-mortgaging to increase their portfolio of properties. The credit crunch meant that between 2007 and 2010 the number of buy-to-let mortgages available fell by 95 per cent as lenders tightened their lending criteria. 

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