What are the Best Buy to Let Mortgages in 2023?

What are the Best Buy to Let Mortgages in 2023?

Monday 20th February 2023

What are the Best Buy to Let Mortgages in 2023?

Buy to let mortgages are available for property investors who want to buy a home to rent rather than live in. Because the goal is to pay as little as possible every month, most buy to let mortgages are interest-only loans rather than repayment plans.

Changes to the Bank of England interest rates during 2022 have disrupted the value of buy to let mortgages. This has impacted whether a fixed-term or variable mortgage is best for buy to let properties.

Keep reading to learn more about buy to let mortgages in 2023, including what interest rates are, how to meet the latest requirements, and whether buy to lets are still worth it in 2023.

What is the Average Interest Rate on a Buy to Let Mortgage?

Property investment has changed in recent years, particularly when it comes to finding the best mortgage for buy-to-let properties. Due to global and national disruption, interest rates have been rising for all types of mortgages.

In 2022, average interest rates for buy to let mortgages were 3.47% for a five-year term (source). According to comparison sites and the Bank of England, 2023 interest rates are now between 4% to 6% for buy to let investment properties with 2-5-year terms.

In 2022, fixed-rate mortgages of 2-5 years offered better rates compared with longer terms of 7-10 years (source) For this reason, most landlords opted for 5-year fixed-rate mortgages compared with any other type of mortgage.

What are the Requirements for Buy to Let Mortgages UK?

Buy to let mortgage eligibility criteria differs depending on the lender. Some requirements are stricter than others, but generally, you'll need to:

• Earn at least £25,000 per year
• Have a 20-40% deposit or a loan-to-value between 80-60%
• Be over 21 and under 70 or 75 when the mortgage is due to end
• Have a good credit score and no/minimal debts

Learn more about becoming a landlord and investing in a buy to let property in Liverpool.

Can You Get Fixed Rate Buy to Let Mortgages?

Buy to let mortgages come with similar terms to residential mortgages. You can get fixed rates, variable rates or tracker buy to let mortgages. Terms available for fixed rate and variable/tracker mortgages are typically two, three or five years.

Fixed rate mortgages stay the same for the entire period, provided you don't change any terms or remortgage during the existing contract. Variable mortgage interest rates are set by the lender but tend to follow the Bank of England's base rate.

Tracker rate mortgages are not controlled by the lender and follow the Bank of England's base rate entirely. When base rates fall, mortgage payments go down. Likewise, when rates increase, monthly payments go up in line with the changes.

Is Buy to Let in the UK Still Worth It?

Becoming a landlord and getting a buy to let mortgage on an investment property in Liverpool isn't a decision that should be taken lightly. Managing a property and finding the right tenants requires expertise to ensure a good, stable rental yield.

Despite increases in buy to let mortgage interest rates in 2023, property investment is still valuable and profitable in the UK.

According to Unbiased, certain areas have a particularly high rental yield. The average rental yield across the UK is around 3%, whereas areas such as Liverpool, Glasgow and Leicester have a significantly higher yield of around 8%.

Getting a buy to let mortgage in the UK is still worth it provided you:

• Choose an investment property in the right area
• Have the right insurance
• Minimise rental voids

Thinking about investing in a Liverpool buy to let? Tuna Fish are your local Liverpool property investment experts. Get in touch today to discuss buy to let mortgages and property investment in Liverpool with our friendly team.

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