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Everything you should know about Buy To Let Mortgages

Creating a Buy to Let scheme is not for the faint hearted. It takes a lot of investment and commitment for the long haul. Are you 100% certain that you can work on a Buy to Let scheme in the long term, and have the support to stay financially stable?

Still, investing in a Buy to Let mortgage to rent your property can be a great way to bring in some extra cash, and take on a new project. Yes, that’s right. Project. Property maintenance, managing finances, adjusting rent payments and dealing with tenants are all part of this long term investment, so you need to keep on top of things.

Daunted yet? Don’t worry; Active Brokers can help you. Read our guide to get a better idea on what a Buy to Let mortgage entails.

What is a Buy to Let Mortgage?

Put simply, a Buy to Let Mortgage allows you to purchase a home and then rent it out as an investment. The tenants will pay rent which covers the cost of the Buy to Let Mortgage and give you extra income to cover your own mortgage.

Rates are typically higher for a Buy to Let Mortgage compared to a regular mortgage. There’s a higher risk that things could go wrong when you trust your property in the hands of tenants. Regardless, it’s still popular with many people interested in saving and investing to see a good return.

That’s the basics out of the way, now onto the questions we’re asked again and again…

How can I successfully get one?

Because you want to be successful, don’t you?

To successfully be the landlord of a Buy to Let scheme you’ll need to find the right property to rent, have enough money from your own income, and hopefully wisdom and experience – but if you’re just starting out in the market this last one will come with time.

Finding the right property…

home suitable for tenants

THINK: what sort of tenants would want to live here?

When you’re deciding if your property is okay to rent, you’ll need to make sure it’s right for the location and the type of tenants that would want to live there.

It’s a good idea to search the market for niches, but you also need to be vigilant. If there’s lots of vacant one-bed flats in an area, then those properties aren’t ideal to rent because they aren’t in demand.

Put yourself in the shoes of the tenants: what are they looking for in this area? How much space will they need? Will they benefit from a property that’s furnished? If you plan to rent to students, then the property should be near the campus, while single and professional business people will need to have a property with good access to transport in the city centre. Think about what the property needs to feel like: simple and modest for single and business people, cheerful, homey and warm for a family.

If you don’t think like the tenant, you won’t be able to provide what they’re looking for. It’s important that you think carefully before you invest in a property, or you won’t have much success.

Can I afford a Buy to Let property?

The first step to finding out if you can afford to start renting to tenants is looking at your own income. If you can’t be certain that you can comfortably afford your own mortgage in the long term, then renting out on a Buy to Let Mortgage isn’t for you.

Buy to Let Mortgages require a minimum of a 20% deposit, compared to the usual 10% deposit for a normal mortgage. Furthermore, interest rates tend to be higher for Buy to Let Mortgages. Plus stamp duty charges (read more about that mood killer here).

The amount of money you’ll be able to borrow to get a mortgage on the buy to let property is linked to the level of rent your property will bring in, as well as your own income. To get an idea, have a look at properties that are similar to the one you plan to rent. Think about location and the sort of tenant that would live there – this is important in deciding how much rent you charge. Search property magazines or talk to letting agents who can give you an idea of how much it would cost to rent a property like the one you plan to.

Types of Mortgages

If you go searching for a Buy to Let mortgage by yourself, you might be overwhelmed by the masses amounts of choice you have with lenders, deals and monthly payments. Many price comparison sites seem simple to use when finding a mortgage, but when you delve deeper into the world of mortgages and renting you’ll come across all sorts of terms. Here’s a brief overview of some popular mortgage jargon terms:



A fixed mortgage means that the monthly repayments are fixed at a specific price for a period of time. Once that period has ended, the mortgage will return to the Standard Variable Rate.


A tracker mortgage “tracks” an interest rate. As an interest rate goes up and down, the mortgage goes up and down alongside it. Generally the mortgage will track the Bank of England base rate.


A discount mortgage is a discount off the Standard Variable Rate. This reduces your mortgage repayments in the early years of the mortgage.

Standard Variable

You’re most likely to go on a Standard Variable Rate after finishing a fixed, tracker or discount deal at the beginning of your mortgage term.


An offset mortgage is one that links to a savings or current account, meaning that you pay less interest on the mortgage by “offsetting” it.

Tied In

Being tied into a mortgage can often mean that lenders will offer you a lower interest rate, as you are committing to the mortgage or their services.

Arrangement Fees

You’ll need to pay this fee to the lender for setting up the mortgage. Generally this won’t exceed £1999. You have the option of adding this fee to the mortgage.


Valuation fees cover the cost of the lenders survey. If you want a more in depth survey, you need to pay more for a home buyers or full structural survey.


Not sure which is best for your Buy To Let? The solution is simple. Just give Active Brokers a call – our advice is always free and we can help explain all the fine details in an easy to understand manner.

Landlord Responsibilities

Let’s start with the tiresome financial responsibilities. It’s essential that you get this sorted and adhere to all the rules and regulations of being a landlord. You’ll need a tenancy contract to protect those living in your property, as well as safeguard deposits and other tenancy agreements.

Next you need to think about maintenance and safety costs. Gas and electrical appliances and systems that are part of the property need to be checked and approved. Fire alarms need to be fitted and you should consider a carbon monoxide detector as well. Furniture that you supply must pass fire safety regulations.

You need to give your tenants notice of when you’re going to visit the property or repair any issues damages. It’s important to have regular checks on the property so that you can keep an eye on the tenants you’re renting to. Trust me, you’ll want to know if they’re damaging or misusing your property.

You need to be careful about having lengthy periods where the property remains empty between tenants. This could leave you short on money to cover your own mortgage, it can also be a sign that you’re not marketing your property right. It could be the price of the rent, the location or type of tenants your property is aimed at. For example, if you’re renting out a family friendly property in a business district with no schools, then you’ll struggle to rent the property.

Using Letting Agents

A letting agent will be able to find tenants for you, they’ll also manage the Buy to Let and do a full inventory of the property for a small fee. If you decide to use a letting agent you’ll want to make sure your property is in safe hands. You can easily make sure that a letting agent is reliable by checking they are qualified with one of the trade’s professional bodies. Have a look at the National Landlords Association or the National Association of Estate Agents. It might be boring researching this, but if you’re looking for less involvement with your buy to let property, this can save you hassle in the future.

home to rent colchesterEmily Wood, one of our favourite clients, runs Home To Rent with over 10 years experience. They’re a great letting agent that we highly recommend for residential properties in and around Colchester, Essex. Contact them via their website by clicking on the logo. 

Landlord Insurance

Buildings insurance is a must: you’re renting your property to strangers. You can reduce the risk to the property by monitoring the tenants and physically strengthening the property… But having a security blanket to help you repair the property if it’s severely damaged will certainly help with those sleepless nights. If you rent the property furnished (even if it’s just the flooring) then you’ll need contents insurance to protect the furnished parts of your property too.

Rent Insurance and other specialist landlords insurance policies will help you cope if the property goes empty for a long period of time. This will also give you aid when evicting difficult tenants and paying any legal costs. Active Brokers can help you with all of this by guiding you through each policy over the phone. You need to be sure of what you need and what you’re covered for.

Tenant Rights and Responsibilities

Trusting your property into the hands of tenants is often a scary and worrying process. By writing out the rights and responsibilities of the tenants you can be certain that they know what you expect. Knowing your rights and responsibilities as a landlord can relieve a lot of uncertainty surrounding the property and contents.

Anything not covered in the Landlord Responsibilities section will fall under the responsibilities of the tenants, unless you agree otherwise. They will be responsible for their own things, and it is up to them to take out contents insurance on them.

How do I apply?

To apply for a quote you need only fill in our short online form to request a call back. If you prefer, you can give us a call directly to talk to one of our professional insurance advisers.

We have over 15 years of experience finding all types of insurance from Life Insurance to Home Insurance to Income Protection to Mortgages, and we have excellent knowledge of both buildings and content insurance.

Give Active Brokers a call so that we can find you the best policy for the best price from the top mortgage lenders and insurers on the market with discounts that only our customers have access to.

Have any more questions? Ask us on our live web chat.


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