How it works

Everything you need to know about Buy to Let mortgages

This guide highlights some of the issues you need to consider if you are buying a rental property for the first time. It also explains how our Buy to Let mortgages work, how much we will lend you, and our main lending criteria.

Buying to let can be a great investment, but it isn't always a simple matter of buying a property, putting in some tenants and waiting for house prices to go up. It's important to ask yourself a few hard questions before you go ahead.

Buying as an investment

Rental property can be an attractive alternative to other forms of saving or investment, such as stocks and shares. The benefit of Buy to Let is that by renting the property you can cover the repayments on your additional mortgage. But it's important to remember that property prices aren't guaranteed to rise and can in fact fall.

If you're new to the rental market, it's also worth bearing in mind that there will be times when you have no tenants in the house but still have to keep paying the mortgage. And don't forget that you will also have all the usual costs of keeping the property in good condition. In other words, make sure you can afford your mortgage repayments, even if things don't always go to plan.

If you're considering Buy to Let, ask yourself these questions

  • Can I afford the deposit?
  • What if I didn't have tenants for three months? Could I still pay the mortgage?
  • Would I be able to sell the property easily if I had to?
  • Is the property in an area that would be attractive to tenants?
  • Am I relying on property prices going up? What if they stay the same or even go down?

Where and when should I buy?

Location is always vital with property and is no less important when buying to let. Fully research the Buy to Let market before you get involved.

Consider starting locally in an area you are familiar with where you can establish what sort of properties let quickly and how much they rent for.

There is currently a strong nationwide trend in the amount of people choosing to rent rather than buy a property, but make sure that you assess the local market carefully and that it doesn't already have a surplus of homes for rent.

Be aware of your ultimate goal

Buying an additional property is an investment, but consider your reasons for moving into the Buy to Let market beforehand. Are you are simply looking for a quick return? Or is it a longer term means of generating monthly income?

Remember that it's a business investment; you are not going to live in the place yourself. It's important to always think long-term, if and when you look to sell the property in the future, will you get the return on investment you expect?

Finding a letting agent

Once you've found your property, it's time to find a letting agent. Unless you're planning on being a full-time landlord, it is likely that you'll use a letting agent to find suitable tenants and collect your rent. The agent will also draw up the relevant documentation. Agents' fees are usually taken out of the monthly rent and they normally charge around 10%-15%, depending on the level of responsibility you give them.

Landlord responsibilities

You still own the house, so you're responsible for its maintenance but your daily tasks as a landlord will depend on what you agree with your letting agents. Discuss your responsibilities with the agent you choose.

How much can you borrow?

Unlike an ordinary residential mortgage, the amount you can borrow with a Buy to Let from Bristol & West Mortgages is based upon the expected rental income rather than your personal income.

We'll lend you up to 90% of the purchase price (or of the valuation price, if it's lower than the purchase price). This means you will have to put down at least 10% of the purchase price as a deposit.

The rental income must be on an unfurnished basis and be equal to or greater than:

  • 100% of your monthly interest repayments if the product you have chosen is fixed or capped for 3 years or more

OR

  • 118% of your monthly interest repayments for all other mortgages.

We can give you mortgages for up to 5 Buy to Let properties on top of the mortgage on your own home, so you can build a portfolio of properties with us.

What you need to know up front:

About you

  • You must be 21 years old to take out a Buy to Let mortgage.
  • You must have had a mortgage for at least 12 months in the past five years, or own a property outright.
  • You must be resident in the United Kingdom.
  • You must earn at least £15,000 a year if you want to borrow more than 75% of the purchase price.

About the property

  • The property must be worth more than £40,000.
  • It must be ready to let in its current state, or after minimal improvements such as redecorating.
  • It can't be an ex Local Authority flat, an office block conversion, or speculatively converted Local Authority block. (We do accept ex Local Authority houses).
  • You can have a maximum of two properties per apartment block or full postcode area.
  • In the case of flats and studios in mixed developments (e.g. above a shop) we can only lend up to 75% of the purchase price.
  • We do not accept flats or maisonettes built within the last 12 months, or being purchased for the first time since conversion. Houses built within the last 12 months or being purchased for the first time are acceptable up to 75% Loan to Value.

About your tenants

  • Your tenants must be standard residential tenants (unfortunately we don’t accept holiday lets, multiple occupation tenancies or your relatives). Department for Work and Pension tenants are acceptable. Student lets are acceptable (maximum 4 tenants).
  • There must be an Assured Shorthold Tenancy in place (or Short Assured Tenancy in Scotland). This is an agreement which basically gives the landlord the right to have the property back at the end of the term of the tenancy.
  • Changes in the 1988 Housing Act have given landlords more power to evict problem tenants - a factor that has dissuaded many prospective landlords in the past.