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Buy To Let Commercial Mortgage
Until quite recently taking out a buy to let commercial mortgage was the only way to get the finance to buy a rental property. Until the arrival of the regular buy-to-let mortgage years ago, taking out a loan for such a purpose meant drawing up the same kind of business plan, for approval by the lender, as any other commercial finance application.
This also meant paying a substantially higher rate for your buy to let commercial mortgage: which is why landlords who have owned their properties for a number of years should start exploring the possibility of remortgaging.
However, there are still some circumstances in which it is necessary to choose a commercial mortgage rather than the more favourable buy-to-let mortgages that are now widely available.
For example, if you wish to rent more than a set number of properties - typically two to four - you may be unable to include all of them in a buy-to-let mortgage deal. Also, if the value of your properties is high - above, say, £3-500,000 - it may be difficult to find a lender who will offer a let to buy mortgage.
In these circumstances it will be necessary to consult a lender's commercial finance department in order to arrange an appropriate buy to let or commercial mortgage. Given the higher individual risk accepted by the lender in these circumstances, you will have to bite the bullet and agree to stump up a higher repayment rate. You will need to do some careful calculations to see whether it is worth taking the step from a buy-to-let mortgage to commercial mortgage. For many people at the margins, it is probably advisable to rein in your commitments and stick within the limits of the buy-to-let packages.
