Taking out a buy-to-let mortgage is not that different from taking out a standard residential mortgage. Similarly, taking out a buy-to-let mortgage on a new build home is just about the same as for any other property. Yet, there are one or two more considerations for buy-to-let mortgages which are listed here.
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First of all, you may need a larger deposit. For a residential property you're moving into yourself, you can often find mortgage deals which require just putting down a 5 or 10% deposit. For a buy-to-let mortgage you can be asked for a 25% deposit or even more. At the same time, if you shop around you could get a deal with just a 15% mortgage but, as said, in general be prepared to pay more.
Remember as well that with a buy-to-let mortgage the amount you're allowed to borrow is based on your future rental income forecast rather than your present personal income. You'll also need to have a very good credit history and, usually, own your home. Since a buy-to-let mortgage is seen as a bigger risk than residential mortgages, you can also expect to pay a higher interest rate. Any fees charged as well are normally higher than for other mortgages.
Another consideration when buying a new-build for buy-to-let is knowing if you're allowed to rent the property out once it’s bought. For instance, if you're buying through certain government schemes, it's often a case that the property can't be rented out afterwards. Ask your estate agent or housebuilder when first making enquiries.
New build properties are very popular for buy-to-let since they can command a higher weekly or monthly rent. Hiring a financial advisor or mortgage broker can also be a wise move if this is your first time purchasing a new home for buy-to-let.
