This appetite coupled with rock bottom interest rates means that for those able to, taking out a buy to rent mortgage is an attractive proposition.
However, landlord buy to let mortgages are not the same as a standard home loan. We take a look at how to carry out a landlord mortgage comparison and how to get the best deal.
Is a buy to let mortgage right for you?
Before you rush into taking out a first time landlord mortgage, it's essential that you carefully consider whether the move is right for you.
Although the prospect of renting out property might seem very attractive right now, a landlord residential mortgage is a long term commitment and sooner or later interest rates will rise and demand could drop off.
It's vital that you are certain you can cope if you can't find a tenant or prices increase. You don't want to wreck your personal credit rating if things don't quite go as you hoped.
You should also remember that there can be a lot of work involved with becoming a landlord, especially if your property needs regular upkeep.
If you compare landlord mortgage rates you should be able to find a deal that's right for you, including fixed term and capped mortgages.
Landlord vs standard mortgages
Whilst buy to let mortgages for professional landlords do indeed work in the same way as any other kind of mortgage, there are some fundamental differences in how they are setup.
For example, in the mainstream lending market you can expect to be able to find a mortgage with just a 10% deposit – or even 5% in some cases. However, landlord mortgages buy to let deals are typically based on a deposit of at least 20%.
The interest rates you are charged for professional landlord mortgages will typically be higher too plus there can be substantial arrangement fees. These can run into thousands of pounds so you will need the money to pay for this upfront.
For these reasons, whether you are looking for a buy to let mortgage for first time landlord or commercial mortgage rates for landlords, comparing the market and doing your homework is absolutely essential.
The good news is that by buying a property to invest in, you are in a strong position. You won't have an onward chain and that means you can haggle far more effectively.
A general rule of thumb is that you need to be able to charge around 125% of your mortgage repayment in rent to make the venture profitable so make sure you don't pay too much for that property!
The other factor that can help if you are looking for a first time landlord buy to let mortgage is that lender will typically allow the loan to go on for longer. This is because it is based on your rental income rather than your ability to work. This can help lower the repayments and make the whole deal slightly less risky.