Surprisingly the amount you can borrow on a buy-to-let mortgage follows the same criteria and legislation as traditional mortgages used to buy your own home. The only real difference is that the amount you will need for a deposit. The mortgage deposit will need to be a far higher percentage of the property purchase price than if you were applying for a traditional mortgage on your own home.
The majority of buy-to-let mortgage lenders expect you to have a minimum of 40% of the purchase price of the property in order for you to qualify for one of their buy-to-let mortgage products.
40% is a significant sum these days with house prices continuing to rise, albeit not as fast as at certain points over the past 3 decades. Mortgage lenders stipulate a high deposit as it protects their investment and ensures that you have sufficient capital to cover any losses should the value of the property decrease.
In our next buy-to-let mortgage guide we will look at the tax implication for you as a landlord and how the legislation published in April 2014 means landlords pay more tax. Before we move on, you may wish to use our Buy-to-let mortgage borrowing calculator to calculate how much you can borrow and what that will mean in terms of a mortgage deposit.
Next: Understanding buy-to-let mortgages and tax
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