Is buy to let more expensive?

Posted on 13 January 2010 by Peter


Hello,

If I change my current mortgage to a buy-to-let is the price likely to increase?

This will very much depend on who your current mortgage is with and why you want to change.

If you are leaving the country to work abroad and want to rent out the property whilst you are away, your current lender may give their consent without changing the basis of the mortgage you have now.  If, on the other hand, you are moving to a new residential property and wish to let rather than sell your current property then you will find that Buy to Let mortgages are generally more expensive.  This in part reflects the risk to the lender of having a mortgage on a property where the borrower would not end up on the streets if they stopped paying.

The actual rate you pay will depend on the size of the mortgage in relation to the properties value, the amount of the arrangement fee you are willing to pay and the anticipated rental income.  A typical arrangement fee would currently be 2.50% of the size of the mortgage. 

I would recommend that you talk to a qualified Tax Adviser or Accountant if you do decide to proceed, because there are tax implications for both the expenditure on and income generated by Buy to Let properties and mortgages.

Best of luck

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