Call us today: 01722 322683

  • Experienced

    We can help with simple and complex portfolios

  • Impartial

    Access to current and broker only mortgage deals

  • Knowledgeable

    We'll search the market to get the deal for you

Financial Considerations for a Buy to Let investment

If you are thinking about purchasing a property for an investment, you’ll need to think about how you will afford to purchase the property. For example, will you need a Buy to Let mortgage in order to raise the capital? And will you be able to afford the additional costs involved with purchasing a rental property?

Below, we discuss some of the financial considerations. If you have any questions about what type of Buy to Let mortgage you should choose, then contact an adviser from Your Mortgage Expert. We will take the time to discuss all your options.

Contact us


What type of Buy to Let mortgage – Interest Only or Repayment?

First things first, you need to decide whether you want a repayment or interest only mortgage.

  • Repayment – With a repayment mortgage, you are repaying the capital borrowed as well as the interest. This means that by the end of the full mortgage term the mortgage will be repaid, as long as you do not change this at a later date and don’t miss any payment.
  • Interest only – With Interest Only, you only pay back the interest and not the capital borrowed. Interest Only generally means your monthly mortgage payment will be lower, as you’re only paying the interest and not the capital back. This means you may be left with more disposable cash during the mortgage term. However, at the end of the full mortgage term, you will still owe the initial capital borrowed which will need to be repaid.

Fixed or Variable rate mortgage

The next financial consideration for a Buy to Let mortgage investment, is should you go for a fixed or variable rate. Many investors will want to opt for the certainty and stability of a fixed rate. But then again, variable rate mortgages can also be attractive. Below we have discussed some of the pros and cons of each type of rate to help you choose what type of Buy to Let mortgage.

  • Fixed rate – Here, your mortgage repayments are fixed and won’t change month to month. Regardless of what happens to interest rates, your mortgage payments will stay the same whether you fix for two, three, five years etc. Effectively, a fixed mortgage acts as an insurance policy against interest rates going up, therefore you tend to find that fixed rate mortgages have a higher rate as you pay a bit more for the reassurance.
  • Standard Variable Rates (SVRs) – A Standard Variable Rate tends to follow the Bank of England rate closely but not exactly. For instance, if the Bank rate is dropped to 0.25%, your SVR might only drop 0.2%. However, when the Bank rate goes up, they often increase it by the full amount. More often than not, you move onto an SVR once your fixed rate term has come to an end.
  • Trackers – A Tracker mortgage will track the Bank rate exactly. This means that whatever interest rate the Bank of England sets, this is the interest rate that you’ll receive on your mortgage. It’s common to have a tracker mortgage for a few years and then you’ll drop onto an SVR after this period comes to an end. There are also some tracker mortgages that follow Libor which is a rate set by the banks themselves.
  • Discount Rates – As stated in the name, discount rate mortgages offer a discount off the standard variable rate (SVR). The discount period can be for a short period of time. For example two or three years, or it would be the entire term of the mortgage, depending on the deal.

There are other mortgage types to choose from, but these are the most recognised ones. One of our mortgage advisers will be able to discuss all the different options with you.

What costs, fees and taxes will you pay?

Before you go ahead and dive into the world of Buy to Let, it’s important to know that you need more than just the mortgage and deposit in order to have a smooth experience of being a landlord. Below we have talked about some of the most common costs involved with property investment.

  • Arrangement fee – Some mortgages come with a product fee, which is normally larger than on residential mortgages. This can either be paid upfront or tagged onto the cost of your mortgage. There can sometimes also be an administration charge made by the lender for arranging the credit of your mortgage.
  • Stamp Duty – If the property you’re investing in is over a certain price, you’ll have to pay a lump-sum tax known as Stamp Duty Land Tax (SDLT) in England and Northern Ireland. The price you’ll pay will vary on the amount you paid for the property. This price will also vary depending on whether you already own a property in the UK. To find out more about the Stamp Duty charges, please read our article on our website.
  • Legal fees – Your solicitor will charge a fee for their services, which includes handling the contracts, documentation and searches amongst other things.
  • Valuation – Many lenders will want to carry out a standard mortgage valuation which you may have to pay for. However, you can look to upgrade to a structural survey or a homebuyers survey report for an additional cost, if you wish.
  • Insurance – Buildings insurance is a must, and if you’re furnishing the property then you’ll no doubt want contents insurance too. Just remember that it’s a landlord’s insurance policy you’ll need rather than a residential policy.

How can Your Mortgage Expert help?

We understand that no two mortgages are the same and our knowledge and experience means we’re in a great position to help. It’s advisable to sit down and run through your finances so that you can compare the cost you’re going to pay for the property, against the rent you’re likely to take in from the tenants. A mortgage adviser could talk you through this so you have a clear idea of whether you can comfortably afford the mortgage on your own.

When you’re ready to apply for your mortgage, our specialist Buy to Let mortgage advisers will be able to arrange an appointment that easily fits around you, whether that’s face to face or over the phone.

Searching the market yourself can be time-consuming. But with our help, we can search thousands of mortgages, including exclusive deals and lenders that you wouldn’t otherwise have access to. We have regular contact with a wide range of lenders, some of whom you may not even know exist! With our help, you won’t have to search or contact each individual lender in order to compare the mortgage terms and rates; we’ll do all that for you.

Contact us to find out more about how we can help you decide what type of Buy to Let mortgage you should choose. We don’t charge for an initial consultation, so by speaking with us for mortgage advice, you won’t be under any obligation.

Contact us

Our handy mortgage calculator

Our mortgage calculator can help you get a better idea of how much you can afford to borrow, and how much your mortgage will cost you in monthly repayments.

  • “This was knight in shining armour stuff. Our conscientious mortgage broker was a delight to deal with from the off and the key to our dream home.”

    Max and Martha, First Time Buyer customers from Cardiff

  • “Being in the Armed Forces I am away a lot, meaning it can be hard to attend meetings, answer emails and especially hard to fill in forms. Adam and his team were extremely helpful and understanding of our situation and provided help wherever they could. After our initial meeting where we provided our required details, we actually did very little of the hard work, apart from signing a couple of papers.”

    Callum and Verena, First Time Buyer Armed Forces Mortgage Customer from Salisbury

  • “I expect my circumstances were fairly rare, but the help and guidance I received from you was invaluable. I feel that the personal touch you provide offers something that appeals to the soldier in me.  During my service I always liked to have a point of contact, someone who was the “go to” specialist in their field.  This provides a degree of assurance about a situation and it was refreshing to find that same degree of certainty transitioning to civilian life, particularly with something as important as a mortgage and buying our family home.”

    Andrew and Helen, Armed Forces Mortgage Customers from Salisbury

  • “Even though we were used to having a mortgage on the rental property, paying a mortgage on your own home was still a bit of a shock after years of having married quarter rental deducted from your pay at source. But, at every step along the way, we felt reassured, understood and that we really mattered to Adam. Trust is an important concept for military families and we trusted Adam.”

    Fiona and Graham, Armed Forces Mortgage Customers from Wilton

  • “As a contractor, it was difficult for me to obtain a mortgage through normal channels so it was great to find a mortgage adviser that specialised in contractor remortgages and understood the challenges. In addition, I had fairly tight timescales, so wanted someone who could make the process quick and hassle free.”

    Andrea, Contractor Mortgage Customer from Warminster

  • “I am a contractor, therefore require specialist mortgage advice. Adam has now concluded two mortgages for us (new mortgage then a contractor remortgage), and is currently arranging a buy-to-let mortgage for us. He also arranged our life insurance for us. We keep returning to him for some great reasons – he is always available, and ready to help. He provides great advice, and always ensures that he meets our requirements exactly. He is prepared to explain things in such a way that even a lummox like me can understand, and his level of service has remained consistently good over the last three years.”

    Matt, Contractor Mortgage Customer from Southampton

  • “Adam’s advice on the different types of critical illness and life insurance were really useful. He also worked with us to decide the best combination of policies that would work with our existing policies to cover our needs. When doing this he happily tweaked quotes for us until we came out with an arrangement that was both affordable and would provide us with the level of cover we thought appropriate.”

    Hannah and Steve, Protection Insurance Customers from Stamford

  • “Adam provided us with factual advice and also with options of which we were unaware. The advice on gifted equity was something we hadn’t heard about and this assisted us hugely to ensure repayments worked within our affordability. He provided us with a very personal service that made the journey from initial call, to mortgage offer and completion hassle free. We have already recommended Adam to someone and will continue to recommend his services in the future.”

    Saul and Laura, Home Mover Mortgage Customers from Salisbury

  • “Mike and I collected the keys to our flat this weekend and we couldn’t be happier. It’s been a long time coming but we got there! We just wanted to say a MASSIVE thank you for everything you have done for us so far. We’ve really appreciated all the help, advice and reassurance you’ve given us all the way through this process. It’s really nice to have a friendly voice on the other end of the phone.”

    Mike and Bethan, First Time Buyer Mortgage Customers from London

  • “Without question Adam found me a deal the estate agent’s broker couldn’t. He was very easy to contact whenever I needed him and he took time to explain the ins and outs of the Help to Buy equity loan scheme mortgage that he found me. I would rate him five out of five and will be back to use him when the time comes to remortgage or move.”

    Chris, Help to Buy Mortgage Customer from Southampton

Contact us

"*" indicates required fields

Monday to Friday: 9am – 5.00pm, Saturday and Sunday: Closed

We will use your name, email address and contact number (‘personal information’) to contact you about the services you have requested or respond to an enquiry you have submitted, which will require us to share your personal information with financial institutions who can assist in the provision of financial services to you including product providers, lenders, banks, insurers, fund managers, platform providers and third party para-planners. For further information on how your information is used, including disclosure to third parties, how we maintain security of your information and your rights in relation to the information we hold about you, please see our Privacy Policy:

Your Mortgage Expert is a trading name of Your Mortgage Expert Limited which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.

Registered Office Address: 18 New Canal, Salisbury, England, SP1 2AQ. Registered in England Number: 08924507.

Sorry to see you go

Please note, by clicking on the link you will be departing from the regulated site of Your Mortgage Expert Ltd. Neither Your Mortgage Expert Ltd nor Mortgage Advice Bureau are responsible for the accuracy of the information contained within the non-regulated site.