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Hey what’s up my name’s samuel leeds and in this video i’m going to talk to you about buy to let mortgages maybe you’re thinking about buying a house and you’re wondering what type of a mortgage you should get on that house if it’s an investment property it very likely will be a buy to let mortgage i’m going to be talking about interest rates whether you should fix

Them repayment versus interest only so if you are going to buy a house as an investment i would highly suggest watching this video until the end before you consider taking out a mortgage and certainly buying a house as a buy to let so if you enjoy my videos a lot of research goes into this and i spend so much time preparing these and going into all the different

Rates and information and research so please give me a massive favor and hit the like button so firstly what is a buy to let mortgage well firstly what’s a mortgage a mortgage is a loan against a house so if you’re buying a house even if you’re buying it to live in let’s say you want to buy a house and it’s 300 000 pound house most people don’t have 300 000 cash

So what they do is they put down a deposit of 10 20 30 and then the rest they’ll take out as a loan a mortgage against the house now if you’re buying a house to live in the mortgage will be a residential mortgage and if you’re getting a residential mortgage the lender the mortgage company will want to know that you can afford to pay the mortgage so they’re going

To want to know your salary your earnings how many children you have what because they need to know hang on a minute if you’ve got all these kids maybe they’re expensive to have and they need to know that you can afford to pay about the mortgage so getting a residential mortgage usually you have to give a lot of forms a lot of form filling out to give you financial

Criteria a buy tech mortgage very different that’s when you’re getting a mortgage to buy a house but it’s not going to be a residential house that you’re living in it’s going to be a house that you’re buying to rent out hence why it’s called a buy to let mortgage now typically buy select mortgage you’re going to need a deposit of 25 so if you’re buying a house for

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200 000 pounds they’re going to expect you to have 50 000 pounds as a deposit and then the mortgage companies will loan you 75 as a 75 loan to value buy to let mortgage so do you need any experience of owning properties do you need to be making a particular amount of income in order to qualify for a buy to let mortgage and the answer is no not really you can get

A buy to let mortgage even if you don’t have a residential mortgage although it does help if you own a house um to begin with but i did not oh my first house was a buy to let you also don’t need to be earning a great deal either in fact the interesting thing about a buy direct mortgage is the lender cares not about your income because you’re not going to be paying

The mortgage the buy to let mortgage is going to effectively being paid by the tenants that live in your buy to the house so the thing that they’ll want to know is how much rent are the tenants going to be paying that’s the big thing that lenders will want to know even if you’re only making five ten thousand pound a year and your salary is really really low you

Will still very likely be able to qualify for a buy to let mortgage as long as the property is a decent house and they can see that the rent is going to be able to cover the paint the the interest payments so what are the interest payments on buy to let mortgages generally speaking they historically if you’ve been watching my videos i’ll be saying maybe three

Percent or they’re in their abouts now they have recently put interest rates up a little bit so then now the average buy to let mortgage is around about four percent interest i have recently just refinanced a whole bunch of my houses and i used a lender called the mortgage lender that was the name of the mortgage lender and i’ve fixed my interest rates for five

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Years because i can see the interest rates are going up usually i’ll fix them for two years but at these times because interest rates do seem to be rising i fixed them for five years and i i’ve got a 25-year term mortgage and i fixed them at 3.3 percent so i’m very pleased with that and that’s fixed for five years so that means i’m gonna be paying 260 pounds a

Month which is going to be my interest payments but my rent on the house this one is 750. so my profit is there they’re about 500 pounds a month so even if interest rates went up in five years time if they go up even if my rents don’t go up if the rent stays the same but the interest rate after five year goes up unless it goes up to ten percent i’m still going to

Be making money i’m quite comfortable with that i’m quite happy with that should you pay interest only or should you pay repayment my general guidance what i usually do is i pay interest only which means that i’m not actually paying back the loan i’m just maintaining the interest on the on the loan and the reason i do that is because the extra cash flow that i’m

Making if i’m making 500 a month profit from one house i’m going to save that money i’m going to get it into a little pot and then i’m going to buy another house and that house is going to pay me 500 pounds a month and i’m going to save that and i’m going to snowball my portfolio and i’m going to use the bank’s money because if i’m paying down the mortgage i’m

Not making any monthly cash flow so my general strategy is to pay as little back as possible because your debt will shrink over time as the value of the house goes up which it probably will as the rent goes up which it probably will but the debt stays the same money shrinks in value over time money becomes worth less over time as they print more and more money as

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Inflation goes up so i’m not wanting to rush to pay off my mortgage my granddad bought a house many years ago for three thousand pounds he put down a one thousand pound deposit he had a two thousand pound mortgage he spent ten years slaving away paying off that two thousand pound mortgage my goodness he’d be better to just leave that mortgage and then after 10 20 30

40 50 years the 2000 pounds is nothing because inflation goes up and money becomes worth less so my attitude is debt shrinks over time so don’t rush to pay it off um our interest rate rate’s going to go up yes i think they will i don’t think they’re going to go absolutely scary anything crazy but i do think we’re going to see significant rises so i would probably

Suggest that you fix them for as long as possible and last question is should you use a mortgage broker my general guidance is yes because there’s so many mortgages out there just because i use the mortgage lender doesn’t mean that they’ll be best for you because every person is an individual with different finances different ability to pay different things maybe

There are some lenders that might be stricter on you or you or you so what you want is you want to go to a mortgage broker or a mortgage advisor and you want to tell them your situation tell them what you’re wanting to do get actual advice and let them independently look at the whole of the market and give you the best mortgage offer with the best rates specifically

For you yes you’re gonna pay them a few hundred pounds for doing it but you’ll save a lot more in the long run in my opinion i hope that’s been helpful as i mentioned smash the like button if you found it helpful drop a comment and i’ll see you next time

Transcribed from video
BUY TO LET MORTGAGES UK (2022) By Samuel Leeds