Many people invest in buy-to-let properties in the UK as a means of supplementing their income, boosting their pension pot or simply because they trust bricks and mortar as an investment. 

As you’ll know, purchasing a property isn’t cheap and it is standard practice to use a mortgage to raise the funds you need to buy a property. This is where buy-to-let mortgages come in. Like all mortgages, these are loans that a bank offers against the value of the property, but these agreements are designed specifically for landlords. 

There are a few key elements to consider when you start looking for buy-to-let mortgages. The complexity of these financial products means it’s usually a good idea to speak to a mortgage advisor before you make any decisions. 

So, what do you need to know? Firstly, most lenders consider a buy-to-let property to be a higher risk than one you live in. That may result in lenders requiring you, as the borrower, to meet additional conditions that you didn’t need if you already have a mortgage for the property you live in.

Secondly, many buy-to-let mortgages are interest only. As their name suggests, that means you only pay the interest accrued each month rather than repaying the capital itself. This is beneficial in that it typically reduces your monthly payments. However, it does mean that you aren’t repaying the amount you owe. 

Thirdly, most lenders will ask for a higher deposit than they do on a property you’ll be living in. This varies but is usually a minimum of 20–25 per cent of the property’s value and can be as high as 40 per cent of the property’s value. 

Finally, there are several factors a lender will look at when deciding whether to offer you a mortgage and how much to lend you. These include your income, the size of your deposit, your credit history, any existing debt you have and the rental yield you expect on the property.