Do buy to let mortgages generally have higher monthly payments than if you were living in the property?

I want to rent out the flat that I live in but have been told by the estate agent that I would need to let my mortgage provider know. Do you think I would need to get a new mortgage to do this and would the monthly payments be likely to increase? ThanksDo buy to let mortgages generally have higher monthly payments than if you were living in the property?
Yes, but it's not because of the risk of damage as mentioned above.





It's because you will be relying on having the tenant's rental payments to pay the mortgage off. If you found yourself in a situation where you didn't have any tenants in the property for a period, then you wouldn't have this income to pay off the mortgage, and it's likely that you wouldn't be able to afford to pay because you're probably paying either rent or a mortgage on the property that you do live in.Do buy to let mortgages generally have higher monthly payments than if you were living in the property?
yes because of the risk of damage
You will need to let the current lender know, depending on the lender they may just transfer it to a BTL mortgage and your payments could be the same if they are more then it is best to look at other lenders as they may be cheaper but best bet is to contact your own lender first
You wouldn't necessarily need to tell your current lender as long as you dont need to apply for a new mortgage. If you need to remortgage your flat at any point in the future you will have to get a consent to let letter from your current lender or remortgage onto a buy to let mortgage. As long as rental payments will cover the mortgage payments then this is classed as a self financing buy to let mortgage and shouldn't be a problem. Some lenders do want your rental to be 125% of the mortgage payment just so that they know you will be covered. If you do change to a buy to let mortgage some lenders have great rates at the moment which you may be able to change to, i know that Birmingham Midshires currently have a buy to let product that is below base rate at 4.99 fixed for 2 years.
You are spposed to let them know, but as its a greater risk for them, your payemnts may go up slightly.





I wouldn;t bother telling them.
Hi Nicole,





They can be a little more expensive how ever if you shop around you could get your self a good deal, they are still out there to be had.





Personally i would advise the lender of your intentions to rent out . Not to do so could cause you all sorts a repercussions.





Most mortgage advisors will advise you freely go and have a chat with one of your choice and see what can be done for you.





You will rest easier if you do it properly and legally.





Good Luck xx
You should always inform your lender if you are renting your property out as they hold a copy of your buildings insurance policy for legal requirements





If you dont tell your lender and say if there was damage to the property (ie a fire) and you had not changed your building insurance to cover the property being rented out then the insurance company would be within their rights not to pay out leaving you liable for the costs.





Buy to Lets





With a buy to let mortgage many lenders will base the amount of advance they are prepared to lend solely upon the rental income that a property is expected to achieve.





Lenders will usually require the rent to be 125% of the mortgage payment. However, some lenders will allow the rental income to be equivalent to 100% of the mortgage payment or take other income into consideration (employment, investment, pension income if their is a shortfall in the rental income).





Example:





If your monthly mortgage payment to a lender is 拢500pm then the rental figure would have to be 拢500x 125%=拢625pm. However, some lenders will consider lending on a rental yield that matches the mortgage payment





(ie 拢500).





Area and Tenant





Type of tenant you will rent to ( council, students, professional)





Expected rental income from the property





You will need to check carefully that your proposed property, and that tenant is acceptable to your lender (as some lenders refuse to lend on ex council property, and / or DSS tenants).





Deal





Consider what type of deal you wish to have





Fixed, Discounted or Tracker





Do you want to repay your mortgage on a Capital and Interest basis or Interest only basis








Do you want to be able to make overpayments on your mortgage.








Other matters to consider





Allow yourself a surplus emergency fund as this will allow you to carry out any repairs or alterations to the property





Allow you a fund for periods when the property is not rented out (change of tenants) Be aware of the tax implications of owning the property





You have not said how much the mortgage is for? If it is a small mortgage then you would best looking at C%26amp; G who have a mortgage deal with free val and no arrangement fee it is a large mortgage - you should not just look at the rate





ie the BM Solutions rate is 4.99% fixed for 3 years but look at the costs attached also ie on this deal there is a 2.25% arrangement fee charged by the lender so for an advance of 拢200,000 the lenders charge would be 拢4500





You would be best speaking to a broker who can advise you on the best deal for your circumstances





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