How much can I borrow
A body of the Bank of England, the Prudential Regulation Authority, introduced new regulations that govern the buy to let mortgage market. As a result lenders view applications differently than in years’ past. Lenders now have to use a strict income stress test, require a rental coverage ratio of at least 145% and will review the applicant’s property portfolio.
Find out how much you could borrow with our mortgage table above.
How to calculate mortgage repayments
Our buy to let mortgage calculator can help you find out how much you can borrow and plan how much you can afford to pay each month.
The buy to let mortgage calculator will produce the best mortgage deals on the market, once you do the following:
- Provide the purpose of your mortgage
- Enter the value of the property
- Input the amount you wish to borrow
- Choose the type of mortgage you want
- Indicate your preference on capital and interest or interest only mortgage
- Decide on the length of mortgage
What is a fixed rate mortgage
If you want to have a set rate of interest for an agreed period of time, you may want to take out a fixed rate buy to let mortgage. You can usually secure a set interest rate for 2,3,5 or 10 years through the majority of high street banks.
Ensuring your mortgage interest rate remains the same for the first few years of your mortgage could be an appealing option. However, the interest rates could change during your fixed rate period, which could mean you end up paying more in interest than you have to. In the event the interest rates do change dramatically, a good interest rate now may not be as beneficial half way through your fixed term.
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What is a tracker rate mortgage
If you are confident that the Bank of England’s base interest rate will remain low, you may want to take out a tracker mortgage; this is because tracker mortgages’ interest rates are determined by the Bank of England’s base rate.
Repayment or interest only
Repayment mortgages are mortgages that require you to pay both the capital and the interest of the mortgage each month. These mortgages usually have higher monthly mortgage payments, but do allow you to repay the mortgage in full at the end of the term.
If you are not concerned with owning the property at the end of the mortgage, then an interest only mortgage may be a good fit for you. This is because interest only mortgages only require you to pay the mortgage’s interest each month; the monthly payments are much lower as a result of this.
Making overpayments on your mortgage could allow you to repay your mortgage quickly.
However, not all lenders are prepared to accept overpayments on a mortgage. It is not uncommon for some lenders to charge early repayment charges if you make overpayments.
If you want to explore your mortgage options, it is a good idea to speak to an independent mortgage broker who will be able to offer impartial advice.