Advanced Mortgage Services Ltd is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Advanced Mortgage Services is registered in England. Company registration number 4751565.

Cherry Tree House, 20 Inverleigh Road, Bournemouth, Dorset, BH6 5HA.

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David Hindmarch

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Buy-to-let mortgages are specially tailored to suit the needs of individuals  or groups, wishing to invest in properties for the purposes of renting to tenants. With this type of mortgage, the amount available to a potential investor is dependent on the value of the property, the rental income and the amount of deposit.

As with most mortgage products there are many options available but these options will depend on a number of factors.

What is the LTV (Loan to Value)?

This is the amount of mortgage required against the value of the property. As a general rule the lower the LTV the better the mortgage interest rate will be, as the lender has more security. The current maximum LTV available is about 85% but this is restricted to a few lenders and will be at a higher interest rate.

Rental income will also need to be established at the point of valuation assessment by the lender. Most lenders require that the property can generate enough income to meet the mortgage repayments, plus an additional 20-50%. The extra amount needed is required in order to cover the costs of possible unoccupied periods, maintenance and potential repairs. These could include

• Property upkeep - maintenance costs for the property.

• Letting agent's fees - letting agents charge around 10% of the monthly rent for finding and vetting tenants with    an additional cost of around 5% if you require a full management service.

• Ground rent / service charges - applicable to leasehold properties.

• Legal insurance - to cover costs from evicting tenants in the event of non-payment, very important, as this can    be very expensive.

• Insurance - building insurance and contents insurance for the items provided as part of the rental agreement.

• Furnishings - the purchase of any furniture. If the property is to be let furnished, make sure you are covered for    this by your home insurance.

• Gas / electrical appliances - cost of maintaining appliances and ensuring they comply with any regulations such    as safety tests.

• Decorating costs - the property may require work ranging from painting, to a new bathroom suite before it is    suitable for letting to tenants.

Many lenders also require proof of additional income of between £20,000 and £40,000 PA to support a mortgage if there was an extended unoccupied rental period.

Some properties will also be excluded by some lenders. These could be blocks of flats, ex local authority properties, HMO’s (Houses of multiple occupancy).

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