First Time Buyer Buy to Let Finance Options. Lending Criteria on Mortgage and Bridging Finance

A buy-to-let mortgage is a type of mortgage specifically designed for properties that are intended to be rented out to tenants, rather than for the owner to live in themselves. These mortgages are commonly used by investors seeking rental income.

Yes, first-time buyers can get a buy-to-let mortgage, but the criteria are often stricter. Lenders may require a larger deposit and may scrutinize the applicant’s financial situation more closely.

Typically, a deposit for a buy-to-let mortgage is around 25% of the property's value, but it can range between 20% and 40% depending on the lender and the borrower’s individual circumstances.

Bridging finance is a short-term loan used to 'bridge' the gap between purchasing a property and securing a longer-term financial solution. It’s often used by buyers who need to complete on a purchase quickly, or by landlords seeking to renovate a property before renting it out.

To be eligible for a buy-to-let mortgage, lenders typically require you to be at least 21 years old, have a good credit record, earn a minimum income (e.g., £25,000 or more), and provide a substantial deposit. They will also assess the potential rental income against mortgage repayments.

Lenders offering bridging finance will look at the value of the property being purchased, the amount of equity or deposit you have, your exit strategy (how you plan to repay the loan), and sometimes your credit history.

Yes, interest rates on buy-to-let mortgages are generally higher than on standard residential mortgages due to the increased risk to the lender.

No, buy-to-let mortgages are specifically for rental properties. Living in the property yourself would breach the terms and conditions of the mortgage agreement.

A stress test is a calculation used by lenders to ensure that the rental income will cover the mortgage payments, even when interest rates rise. Typically, lenders look for rental income to cover 125% to 145% of the mortgage interest payments.

Lenders will usually require a rental assessment or a property valuation report to gauge the expected rental income. They often use this figure to ensure it meets their stress test requirements.

Yes, many investors remortgage an existing property to release equity, which can then be used as a deposit for a buy-to-let purchase.

Buy-to-let property owners need to pay income tax on rental profits, stamp duty if purchasing an additional property, and potentially capital gains tax when selling the property.

A fixed-rate mortgage has a set interest rate for an agreed period, offering payment stability. A variable-rate mortgage’s interest can change based on market rates, which means payments could increase or decrease.

With a repayment mortgage, monthly payments cover both interest and principal, reducing the loan over time. An interest-only mortgage requires only interest payments, with the principal due at the end of the term.

Yes, this is possible if your lender allows it, but you will need their consent and may have to refinance under a buy-to-let mortgage. Your property may also need to meet certain requirements to qualify.