Buy to Let mortgages are very popular in the UK. Reasons for their growing popularity are: Property is a great longer-term investment, especially as stock markets are volatile. Interest rates are low, so buy to let mortgages offer an attractive alternative investment. With the overall UK population rising, a high divorce rate plus growing student numbers, there is plenty of demand for rental accommodation*. Mortgage lenders are offering competitive, specifically-designed, accessible buy to let mortgages to make life easy for the landlord.

Early repayment charges may apply to mortgages of this type.

Buy to Let Mortgage Types

In the past, the only type of buy to let mortgages available were variable rate deals. However, nowadays there is a whole range of buy to let mortgages, from fixed rates and discounts to trackers and flexible rate mortgages. Buy to let mortgage lenders will usually insist that you have a deposit of 25 per cent, so the size of your deposit will help determine the amount you can borrow. Lenders will usually insist that the rent the property will command covers 125 per cent of your mortgage payments.

This protects both you and the lender against rental voids - periods when the property is un-tenanted.

Unlike residential borrowers, most buy to let investors opt for interest-only mortgages, simply paying off the interest owed to the lender, but not the outstanding capital. This is repaid on the sale of the property.

THE FINANCIAL SERVICES AUTHORITY DOES NOT REGULATE SOME FORMS OF COMMERCIAL AND BUY TO LET MORTGAGES.

* UK National Statistics 2008