How Easy is it to Secure Buy Let Mortgages?

Before the introduction of the assured shorthold tenancy in the mid-1990s it was notoriously difficult for first-time property investors to get approval for buy let mortgages; the reason being that before the new type of tenancy agreement came into force it was extremely difficult for landlords to evict troublesome or non-paying tenants…and providers of buy let mortgages knew this.

Today the strength of the assured shorthold tenancy means that landlords have rights when it comes to eviction, and as a result mortgage providers are now starting to reinstate buy let mortgages to their portfolios of financial products.

This is obviously good news for wannabe property investors but just how easy is it to secure a buy let mortgage in today’s market?

Basic Requirements

Because of the on-going need for private rent properties, more and more providers of buy let mortgages are approving mortgage applications that they wouldn’t have approved a few years ago. The basic requirements have changed a little during this time though, and today you – as a potential property investor – will need the following at the very least:

  • A deposit of between 25% and 40% – this may seem a lot but most providers of buy to let mortgages will only lend 60% of the value of the property. Some, such as Barclays, have recently introduced new types of buy to let mortgages that allow you to borrow up to 75% of the property value, but you will have to meet other requirements in order to do this.
  •  An income of at least £20,000 per annum and more likely around £35,000 per annum, not including the predicted income from the property you want to buy and let. Most mortgage providers like to know you can continue to pay the mortgage payments if you find yourself without tenants at any time.
  •  The ability to receive at least 125% of the monthly mortgage payment as rental income. To meet this requirement you need to find out from a professional the estimated monthly income you can expect to receive from the property you want to buy. This amount is then used to calculate the amount of mortgage you can comfortably afford – and hopefully it will at least equal the amount you want to borrow.

There are of course other requirements, terms and conditions of buy let mortgages but as each individual provider specifies different criteria they can’t all be mentioned here. The three requirements above are non-negotiable though, so as a property investor these are the three you should concentrate on.

So in answer to the original question: buy let mortgages are a lot easier to secure now than they were 10 years ago but you still have to have a chunk of money spare for a deposit and a decent property in mind to purchase.