This type of mortgage is available to those who want to buy a property to rent out rather than a residential loan.
They work in much the same way as a residential mortgage, in that you have a choice of different types of rate and repayment methods detailed above. However the amount that you can borrow is not based upon the amount of income that you earn but rather from the amount of the rental income the property is likely to make.
The way that this is worked out is that the rental income expected has to be a percentage of what the monthly mortgage interest payment will be. Depending on the lender this percentage can be anything from 100% up to 135% of the mortgage interest.
For example if your mortgage payment was £1,000pm then the rental income might have to be anything between £1,000 – £1,350 pm depending on the lender.
Before taking out this type of mortgage it is important that you seek advice from a qualified tax adviser as your rental income could be subject to income tax.Contact us for a free chat about you mortgage requirements
