Buy-to-let mortgages and residential mortgages are essentially a loan used to purchase a property. However, if you do not plan to live in that property and instead would like to rent it to a tenant, you will need a buy-to-let mortgage.
Lenders consider tenanted properties to be a higher risk, and typically charge higher rates for mortgages if the property is used in this way. If you would like to purchase a property to rent out, you will need to be able to pass specific eligibility criteria and have a deposit of at least 20% or more of the property price.
Unlike residential mortgages, buy-to-let mortgages are normally interest only rather than repayment. You benefit from lower monthly payments than with repayment mortgages, but you must be able to repay the capital in full at the end of the mortgage term. If you plan to sell the property to pay this capital, you must have a plan if the property value has dropped.
The fees associated with taking out a mortgage also tend to be higher for buy-to-let mortgages.
You should always seek independent accountancy advice on the best way to repay your buy-to-let mortgage.