Buy-to-let is a term used to describe the purchase of a property specifically to let it out, that is, to rent it out. A buy-to-let mortgage is a mortgage loan specifically designed for this purpose. When you buy a property for buy-to-let purposes, you act as the landlord, letting it out and charging rental payments. The rent on a buy-to-let property should cover the cost of the mortgage, expenses such as building insurance, repairs, and any letting agents fees, and it should also provide you with a monthly profit.

Buy-to-let mortgages are similar to ordinary mortgages, but with some key differences:

• The fees tend to be much higher.
• Interest rates are usually higher.
• The minimum deposit is usually 25% of the propertys value (although it can vary between 20-40%).
• Most buy-to-let mortgages are interest-only. This means you pay the interest each month, but not the capital amount. At the end of the mortgage term, you repay the original loan in full.

If youre planning to rent out your property, youll need a buy-to-let mortgage. Many lenders consider a buy-to-let mortgage as higher risk, so you may need to meet certain conditions to be eligible for one. These typically differ from lender to lender and may include the following:

• Your lender may make it a condition that you already own your own home, whether outright or with an outstanding mortgage.
• Your lender may require you to have a minimum income.
• Your lender may require you to have a certain level of savings.
• Your lender may require you to have a good credit history.

Its important to note that being a landlord can be rewarding financially, but its also important to understand the details of buy-to-let mortgages and the potential risks, such as a fluctuating housing market, to help you get the most from your investment.