Buy-to-let mortgages are a type of commercial mortgage used to purchase residential property to rent to tenants. Most buy-to-let mortgages holders already own their own homes, but some lenders are offering this type of mortgage to first-time buyers, noted Moneywise.co.uk in January 2018.
There are conditions for these mortgages; at least a 25% deposit is required, and borrowers need to have a high annual income of at least £85,000. Due to these conditions, buy-to-let mortgages for first-time buyers are likely to remain something of a niche product.
For individuals who can afford the deposit and are financially well-off, buy-to-let can be a good business investment, especially since there is a high demand for rented property. In some areas, particularly in the North of England, rental yields are high and property prices reasonable.
Some people live in high house price areas and cannot afford to purchase a home, but they may be able to afford cheaper property in an area they do not want to live in. They can rent the property out and, in the future, expect to purchase a home for themselves in their preferred location.
Many buy-to-let lenders for first-time home buyers only offer their deals through mortgage brokers who can find borrowers the best mortgage deals for their circumstances.
Buy-to-let may not be suitable for everyone. Financial advice is needed, especially when calculating the profitability on investments. As well as the mortgage repayments, there are maintenance and administration costs to pay.