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Is a Buy-to-Let Mortgage Harder to Get?

Getting a buy-to-let mortgage with bad credit can be difficult but it's not impossible. Learn more about what lenders look for when evaluating purchase-to-rent mortgage applications.

Is a Buy-to-Let Mortgage Harder to Get?

Getting a mortgage for a buy-to-let property can be more challenging than getting a standard residential mortgage. This is because lenders consider buy-to-let properties to be more risky investments. If you have a poor credit history, it can be even more difficult to get a purchase-to-rent mortgage. However, it is still possible to get one with the help of a specialized lender.

Generally, you'll need 25% or more of the purchase price of the property as a deposit for a purchase-to-rent mortgage. Interest rates tend to be higher than residential mortgages, and product fees may also be higher. It may also be more difficult to obtain a mortgage when you buy your first home to live in, as lenders will evaluate any outstanding debts you have on your purchase-to-rent mortgage. Buying a second property can be an investment in and of itself, and by renting it out, you can make the house pay for itself.

The money you receive as rent can also “recharge” your current salary, and some landlords use it as their sole source of income. Of course, buying to rent involves some risks, so make sure you know all the facts first. When evaluating your purchase-to-rent mortgage application, lenders will typically want to know how much the rental property will earn. Many lenders require that your annual rental income be at least 125% of the amount you pay in interest on the mortgage per year.

Therefore, when looking for a property to buy to rent, you may want to get advice from a mortgage broker as part of your application process. You should also think about the type of interest rate you want; for example, fixed or variable. It's always a good idea to search and compare mortgages from multiple lenders to find the best deal for you. You could also consider seeking advice from a mortgage broker; they can help you find mortgages that fit your criteria and even help you through the application process. It's possible to get a purchase-to-rent mortgage if you're buying for the first time, but the lender's requirements can be much more stringent. This is because lenders are likely to see it as a greater risk, since you have no previous experience managing a mortgage.

Therefore, they can request a larger deposit or a guarantor to reduce the risk of you not returning their money. Getting a buy-to-let mortgage with bad credit can be difficult, but it's not impossible. It's worth noting that if you want to re-mortgage while you have your consent to rent, you may have to switch to a buy-to-rent mortgage. Checking your Experian credit score can give you a good idea of how lenders might see you.

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