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Buy-to-let mortgages FAQs

What does LTV mean?

LTV or loan-to-value is the value of the mortgage compared to the value of the property expressed as a percentage. For example, if you have a 5% deposit, you will need a 95% LTV mortgage.

What is APRC?

The APRC is the Annual Percentage Rate of Charge and is the overall cost of the mortgage including interest and fees.

What is the difference between leasehold and freehold?

Leasehold means you own the building but not the land it stands on and only for a certain period of time. If there are fewer than 70 years left on the lease you may find it difficult to get a mortgage from a mainstream lender.

Freehold means you own the building and the land it stands on.

What is the difference between a fixed rate and variable rate mortgage?

A fixed rate mortgage means you fix the interest rate of your mortgage for an initial fixed period.  After the fixed rate ends your mortgage will go onto a variable rate.

Fixing your mortgage means your mortgage payments are guaranteed to remain the same for the fixed term.

Once you are on a variable rate your mortgage payments may move in line with market conditions, therefore your payments could go up or down.

What is the difference between an interest only and a repayment mortgage?

With a repayment mortgage you pay off both the interest and capital with each monthly payment. This means at the end of the term your mortgage will be repaid providing all payments have been made.

With an interest only mortgage you only pay the interest each month and the amount of capital owed will not reduce.  

This means you need to have suitable plans in place to pay off the mortgage at the end of the term. You could use sale of the mortgaged property, use savings/investments such as cash ISAs or, stocks and shares ISAs, an endowment policy or pension.

What is a decision in principle?

A decision in principle is a document we will provide confirming that you will be able to borrow a certain amount subject to underwriting.

You can use this document to prove to the seller that you have been pre-approved for a mortgage.

 

Applying for a buy-to-let mortgage

How much can I borrow?

That depends on your individual circumstances. We will need to take into account the expected rental income and we may need to do a more detailed affordability assessment. Our expert advisers can advise you on the potential amount you could borrow.

What are your minimum and maximum loan amounts?

Our minimum loan amount is £25,000.

On standard and specialist buy to let mortgages we will lend up to £1,000,000. If you want to borrow more then speak to one of our advisers on 0333 3211001 who will be able to discuss our bespoke options.

Buy-to-let Mortgages Lending Criteria

How old do I have to be to apply for a buy to let mortgage?

For first time landlords you must be at least 25 years old and if you’re an existing landlord 21 years.

The maximum age is 85 years old at the end of the mortgage term.  If your mortgage term takes you beyond the age of 70 years or your planned retirement age, this will be subject to an additional affordability review.

Can I apply for a buy to let mortgage if I’m retired?

We will consider an application if you are retired as long as you are in receipt of an income from private pensions, savings, investments or other properties. You will need to provide proof of your income from pension statements, P60s or SA302s.

How many buy to let mortgages can I have?

There are no limits on the number of buy to let properties you have in your overall portfolio and, depending on your circumstances, you can have unlimited properties with Aldermore.

Payments and charges

Can I make overpayments on my buy to let mortgage?

Overpayments of up to 10% of the balance outstanding can be made each year, starting from the date of original mortgage completion and using the balance outstanding at the latest mortgage anniversary date, without incurring an early repayment charge. If you do make an overpayment, then the amount you owe and the interest you are charged will reduce from the date the overpayment is credited to your account.

Overpayments of more than 10% of the balance outstanding, or full mortgage repayment, will incur the early repayment charges detailed above.

Will I have to pay any early repayment charges?

Yes – if you redeem your mortgage within the early repayment charge period you will be subject to charges. These will vary depending on the type of mortgage you take out and will be made clear when you apply for your mortgage.

If you'd like to get the ball rolling or have any questions, give us a call on 0333 321 1000.

IF YOU FAIL TO KEEP UP WITH PAYMENTS ON YOUR MORTGAGE A "RECEIVER OF RENT" MAY BE APPOINTED AND/OR YOUR RENTAL PROPERTY MAY BE REPOSSESSED