Buy-to-let (BTL) mortgages target those who wish to purchase a home that they plan to let out to tenants. Although a BTL mortgage shares similarities with a standard residential mortgage, there are also some major differences.
Eligibility and lending criteria
This varies from bank to bank and client to client. Most banks and building societies offer BTL mortgages, but terms, conditions, and costs vary enormously depending on the needs of each client. 
For example, some mortgage providers will not lend to individuals who are under the age of 25 years or have an annual income of less than £22,000 a year. Lenders may impose an ‘upper’ age limit on the term of the mortgage by insisting that the mortgage is repaid in full before the borrower reaches a certain age — 70 is not untypical. 
Lenders may also restrict the number of BTL mortgages a borrower can have with them at any one time. Or the lender may impose a ‘cap’ on the total amount of BTL funding they are prepared to advance to a borrower.

Like most mortgages, lenders will carry out credit checks to get an idea of your credit history. In common with a standard residential mortgage, the potential lender will take account of your personal credit rating. It is important the client is aware of their own situation and keep their financial commitments satisfied because if you have any unpaid debts or county Court Judgements — or you have failed to make previous or existing loan repayments on time — the lender may use this against you and refuse any form of lending to you.

Affordability is important when it comes to any mortgage provided by the lender. However, the affordability criteria for BTL mortgage vastly differs to the criteria of say a residential mortgage.
For the conventional residential mortgage where the lender will look at the borrower’s salary and determine how much they would be willing to lend. However, for a BTL mortgage, when considering their decision to make an advance or not, lenders will also take into account the amount of rent the borrower is hoping to achieve from the property. The rental figure achieved is seen as the primary source from the lender to service the loan borrowing.
As the lender will be using the rental figure as a yardstick whether to lend to the borrower or not, most lenders require that the rental income figure covers at least 125% of the monthly payment. As an example, if your monthly mortgage payment is £1,200, the minimum monthly rent needs to be at least £1,500.
For that reason, BTL lenders like to see a situation where the rental income covers at least 125% of the monthly interest payment. In other words, if your monthly mortgage payment is £1,000, the monthly rent should be a minimum of £1,250.

LAll BTL mortgages require the borrower to put down an initial deposit. Typically, the highest loan-to-value (LTV) mortgage available on a BTL basis is 75%.
The borrower is required to put down a deposit of 25% with the remaining amount to be provided by the lender as a mortgage. With 75% LTV being the common figure for BTL mortgages, this does not limit borrowers able to put down an even higher deposit from not doing so. As a borrower, if you are able to put down an even higher deposit this will work in your favor as lenders will more often than not provide even more favorable interest rates.
Interest rate
As BTL mortgages represent more of a risk for lenders than standard residential mortgages, the rate of interest charged on a BTL mortgage is higher for the borrower.

Survey: As for all mortgages, an independent surveyor will be appointed to assess the property’s condition, market value and potential rental income. In terms of factors affecting the property’s future value, these will also be mentioned in the report. Surveys are usually instructed at the cost of the borrower but there are some lenders who offer a free survey depending on the product you choose to go ahead with.

Conveyance: As for all land acquisitions in the UK, these need to be transferred legally on the register where the property is transferred from the seller to the buyer. This process is the Conveyancing aspect leading to completion of the transaction. Some lenders also offer free conveyancing as part of the product but this is subject to availability of course and can be changed at any time.

Stamp Duty for Buy-to-let property: Depending on the purchase price of the property, the purchaser may have to pay stamp duty land tax which is calculated as a percentage. Other costs: When securing a mortgage product with the lender, most lenders do charge an arrangement fee for the product. Now this can be paid before the completion stage or it can be added to the loan borrowing. If you choose to add the arrangement fee to the loan, this will reflect on the monthly payments. Please refer to your mortgage illustration provided initially which will give you all accurate payments due over the duration of the mortgage.

There are various types of mortgages available to the borrower which suit their individual need. The common mortgages on the market are fixed rate, discount, tracker and variable rate.

BTL mortgages are an investment so borrowers may wish to go with the fixed rate option over a period. This gives the borrower the peace of mind knowing the exact figure which is due every month, some may opt to choose a tracker or variable mortgage where the payment could increase or decrease depending on the interest rate changes by the Bank of England.

MOST BUY-TO-LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.