When it comes to owning properties in general, it pays to know the ins and outs of the different types of mortgages available today. This is especially important for landlords out there who want to rent a property as a business – for these individuals, the regular mortgage will not do. Instead, it’s all about the Business Buy to Let mortgage, a risky but also a very rewarding form of mortgage that can vary quite a bit from lender to lender. Aside from the normal Buy to Let mortgage, there is also another form known as consumer Buy to Let mortgage. So, what is a Consumer Buy to Let mortgage?
What is the main difference between a business and a consumer buy to let mortgage?
Perhaps the most important difference for those who don’t know too much about consumer Buy to Let (as business is much more common), is to do with the nature of the property being rented out. For landowners who have experience renting and deliberately want to rent out property, business Buy to Let mortgages are what they need to apply for. On the other hand, if an individual homeowner becomes an accidental landowner and never intended to do it in the first place.
What are the criteria for consumer Buy to Let mortgages?
It’s understandably confusing as the term ‘accidental landlord’ can be difficult to understand in a professional sense. By explaining the criteria of the consumer Buy to Let mortgage however, it becomes easier to see what would apply for both business and consumer. The criteria for most consumer Buy to Let mortgages are as follows:
- The property was not purchased with intend to rent it out
- Renting property is not your source of income (at least not the main source)
- You do not own other properties that are being rented
- You have lived in said property for a certain amount of time (applies to family).
By looking at this criteria, it becomes obvious that if you purchase a property with the intent to rent it out immediately, business Buy to Let is the right type to apply to. The same goes for being a professional landlord and already having properties you’re renting out. This is the difference between a professional and an accidental landlord.
What are some of the differences of the consumer Buy to Let mortgages?
Considering the fact that this was not started with a business in mind, a consumer Buy to Let is actually afforded a great deal more protection than the regular Buy to Let mortgage for business purposes. However, it’s also important to note that the requirements as well as the application will be stricter – about the same as if you were trying to apply for a home mortgage. On the other hand, the business Buy to Let has a higher deposit requirement on average.
To conclude, the consumer Buy to Let mortgage offers an option for those who accidentally become landlords without intending to from the start. It’s a good option to have for those who aren’t exactly professionals in the renting business and aren’t meaning to use it as a main source of income. On the other hand, business Buy to Let is for professional landlords who want to be able to rent for a living.
Some Buy To Let Mortgages are not regulated by the Financial Conduct Authority.
