While it’s relatively uncommon, it is possible to get a buy to let mortgage even if you’ve never bought a property before.
Most lenders will prefer you to be a homeowner already, but if you can provide enough of a deposit and proof of a good income, as well as everything else you typically need for a mortgage application, then it’s entirely possible for your first mortgage to be a buy to let deal.
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
What are the differences between a buy to let mortgage and a residential mortgage?
Lenders take different factors into account when deciding if you’re eligible for a buy to let compared to a residential mortgage. A buy to let is considered a bigger financial risk than buying a house to live in to a lender, as your mortgage repayments can increase beyond the income you receive, so they want to reduce the risk by asking a bit more from you.
You’ll therefore need to put down a bigger deposit. Whereas you can usually take out a residential mortgage with a deposit as little as 5% of the property value, most lenders require a minimum 25% deposit if you want to take out a buy to let mortgage.
With a buy to let mortgage, you’ll only be paying off the interest you owe the lender each month, rather than the capital, until the mortgage term finishes. At that stage, you’ll either need to remortgage the property, or repay the capital (either by selling the property or using your own savings). The lender will look at how much income you receive at the moment and assess how much rental income they expect the property to generate to see if they think you can afford your interest payments. Lenders usually expect you to have an income of at least £25,000 per year already.
For an in-depth look at how buy to let mortgages work, read our guide to Understanding buy to let mortgages. Our free mortgage comparison service allows you to compare buy to let deals from the whole of the market and find out how much they could save you.
If you’d like to see how much you might be able to borrow for a buy to let property, simply enter your expected rental income in our buy to let mortgage calculator to get an estimate.
Does it make a difference if I am a first time buyer?
It is entirely possible to get a buy to let mortgage if you’ve never bought a property before, but it does limit your options quite a bit in terms of which lenders you can go to. This is simply because lenders will almost always prefer somebody with some level of experience in the property market.
Teddy Cenaj, mortgage expert at Rest Less Mortgages, said: “It is possible as a first time buyer to get a buy to let mortgage. However, most lenders will treat affordability in the same way as for a standard residential property, which is based on your income and outgoings rather than purely the rental income generated by the property.
“There are some specialist lenders that will treat the application like a normal buy to let and look at affordability based on the rental income and not just go by income multiples. However, they do tend to charge a lot more than your normal high street lenders.
“What you need to know is that as a first time buyer on a buy to let you will be very limited in the amount of lenders you can go to.”
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
Can I live in my buy to let?
No, you cannot live in a property that you take out a buy to let mortgage on. Buy to let mortgages are exclusively for homebuyers who intend to rent the property out to tenants. If you want to live in the property, you will need to get a standard residential mortgage on the home instead.
You can find out more about all the different mortgage options that may be available to you, and how they compare, in our articles Mortgages for over 50s: What you need to know and Mortgages for over 60s: what you need to know.