Buy to let or BTL mortgages are mortgages specifically for landlords who wish to buy a property to rent it out to a tenant.
The rules around buy to let mortgages are similar to those around regular mortgages nowadays, but there are some key differences. There are also special tax considerations that you should also be aware of before taking on a second or subsequent property to let to tenants and further, there are additional SDLT fees payable for second or subsequent owned properties such as buy to let mortgages.
With any investment, there is always a risk and you should carefully consider the risks before taking on a buy to let mortgage.
The risks can include:
a) The amount of rent you receive may not cover the mortgage payments but you will still each month be expected to meet the shortfall; and
b) If you cannot find tenants or there is a gap between one tenant leaving your property and the next tenant taking the property - known as “voids” - may mean that you will have difficulties in covering your mortgage payments and you will still each month be expected to make the mortgage payments; and
c) Non-paying or poorly paying tenants are notoriously difficult to evict and during that time the mortgage still needs to be paid in full; and
d) Difficult tenants may leave the property in substantial disrepair and the cost of those repairs (if not met by the tenant) must be met by you; and
e) The value of your property may fall as well and you might not be able to sell it for as much as you paid for it or had hoped to gain in value. If the sale price does not cover the whole mortgage, you will have to make up the difference.
Please contact us with your questions around BTL mortgages, we are happy to help.
The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.
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