Buy-to-Let Mortgage (BTL)
A buy-to-let mortgage is a loan taken out by a landlord to buy a property specifically to rent it out to tenants, rather than to live in it themselves. The lender will assess the application using expected rental income as well as the borrower’s own finances, and will normally require a larger deposit than for a standard residential mortgage.
Most buy-to-let mortgages are on interest-only terms, meaning the landlord pays just the interest each month and must repay the capital later, for example by selling or remortgaging. The mortgage offer will usually set conditions about who the property can be let to, the type of tenancy and minimum rent levels.
For renters, a landlord’s buy-to-let mortgage does not reduce legal rights. However, if the landlord falls behind on payments, the lender may seek possession through the courts. In some cases the lender must honour an existing tenancy. In others the tenant may eventually have to leave, but proper notice and court procedures are still required, you cannot be lawfully evicted simply because your landlord has money problems. Also see Stamp Duty Land Tax (SDLT) and Foreclosure.
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