If you want to buy an investment property, then you’ll need a buy-to-let mortgage. Read our quick guide before making any decisions.

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Your buy-to-let property may be repossessed or a receiver of rent appointed if you do not keep up payments on your mortgage.

 

What is a buy-to-let mortgage?

A buy-to-let mortgage is designed for people who want to invest in property which they hope will generate an income from rental.

You need to use good judgement and consider all the costs you’ll face as a landlord. You’ll need to be prepared for the possibility of rent not coming in, interest rate rises and changes to tax law. It’s always worth getting independent financial advice before taking out a buy-to-let mortgage.

What do you need for a buy-to-let mortgage?

You’ll need to be 21 years or over and have a residential property, either owned outright or mortgaged with a UK lender.

You will also usually need:

  • A deposit of around 25% or more of the property’s value.
  • A UK credit history. If you don’t have a recorded UK credit history, a Barclays international bank account will help to show your overall financial position.

Surveys and searches

Land Registry searches: This will confirm the property’s current owner.

Local authority search: This will show any development plans that could affect the value of the property, such as a new road proposal.

Condition statement: Your mortgage lender may need proof that the property is suitable to secure the loan. We offer a range of statements:

  • Barclays valuation describes the overall condition of the property, in particular structural movement and essential repairs
  • Barclays survey and valuation gives advice on areas that need attention now or may in the future
  • Barclays building survey is the most detailed investigation.

We also include advice on saving energy, property maintenance, security and fire safety with each report.

Fees

You may have to pay an arrangement fee to set up the loan and an early repayment charge to end it ahead of schedule. Plus, there may be other legal or conveyancing fees on top of the survey and search costs.

Taxes

Capital gains tax may be due when you sell an investment property in the UK.

Stamp Duty Land Tax on UK properties is normally charged as follows:

  • nothing on the first £125,000 of the property price
  • 2% on the next £125,000
  • 5% on the next £675,000
  • 10% on the next £575,000
  • 12% on the rest (above £1.5 million)

More details on Stamp Duty Land Tax are on the UK Government website.

Insurance

Generally, buildings insurance covers structural integrity and risks such as fire damage.

Other insurance options generally include emergency repair cover and landlord's liability.

Contents insurance is the responsibility of the tenants.

Want to buy a UK property? Talk to us about your mortgage options. Call us on: 

+44 (0)1624 684316*

Want to buy a UK property?

Talk to us about your mortgage options

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