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What to look out for when buying to let
The biggest advantage of a fixed rate is that you know exactly what your repayments will be for a pre-agreed length of time, as they will not change no matter what happens to wider interest rates.
Monthly repayment cost
This is a fixed cost each month. Knowing this cost will help you to determine if the mortgage is affordable for you, and to budget for the repayments.
Capital gains tax
If you’re a basic rate tax payer, CGT on buy to let second property’s is charged at 18% and if you’re a higher or additional rate tax payer it’s charged at 28%.
The income you receive as rent is liable for income tax and should be declared on your Self Assessment tax return for the tax year it was earned in.
Penalties for late/missed payments
It's worth noting what to expect in the event that payments are late or missed, and if this is something you're prepared to accept.
Early repayment options
You might be in the position to repay your mortgage earlier than your agreed term. It’s good to be aware of your options as you might be able to do it without fees.
Approval in Principle (AIP)
An AIP indicates how much you could borrow based on the information you have provided, it performs various criteria and credit reference agency checks, and gives a conditional decision to lend based on its findings.
Annual Percentage Rate of Charge (APRC)
Annual Percentage Rate of Charge - this shows the overall cost of borrowing, taking into account the term, interest rate and other costs.
Higher Lending Charge
A fee which may be charged if the amount borrowed is more than a given percentage of the value of the property. The lender will use the fee for an insurance policy to protect them against financial loss in the event of a borrower not meeting their mortgage payments. The fee is usually payable in full up front. You may be liable for any mortgage shortfall debt if after possession the sale proceeds are not enough to repay your outstanding debt. Choose a Post Office mortgage and the Higher Lending Charge is paid by the lender for mortgages above 75% LTV. No Higher Lending Charge is payable for mortgages up to 75% LTV. See the Lending Criteria for more information.
Loan to Value (LTV)
It’s the amount of mortgage expressed as a percentage of the value of the property or purchase price, whichever is lower. For example, a mortgage of £80,000 on a purchase price of £100,000 would be 80% LTV. If the valuation of the property is lower than the price you've agreed, the LTV will be based on the valuation.
Overall cost for comparison
The total cost of a loan, including interest charges and product fees, shown as a percentage rate. The calculation assumes that you keep the mortgage for the full term. APRC is the industry standard calculation and allows you to directly compare mortgages from all lenders.
Product fee / Standard legal fees
Product fee: This is a fee charged on some mortgages as part of the product. It can be paid upfront or added to the loan. If you add it to your mortgage it will increase your outstanding balance and interest will be charged for the duration of the mortgage. Standard legal fees: If your mortgage states that standard legal fees are paid by the lender, the lender will pay the fees if you use their nominated solicitors. Terms and conditions apply, additional legal work may incur additional fees, please refer to the General Lending Criteria for full details.
Also known as a lender's valuation, this is a basic assessment that’s carried out on a property to establish its condition and value. If your mortgage states that valuation fee is paid by the lender, the lender will pay for one standard valuation on the application.
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Please note our online mortgage application is only compatible with Internet Explorer 9+, Google Chrome 34+, Firefox 28+, Safari 5 and 7 web browsers and is not optimised for mobile phones.Subject to status and lending criteria. Written mortgage illustrations available upon request. Borrowers must be aged 18 or over.
Post Office Mortgages are provided by Bank of Ireland (UK) plc. Post Office Limited is an appointed representative of Bank of Ireland (UK) plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Post Office Limited is registered in England and Wales. Registered Number: 2154540. Registered Office: Finsbury Dials, 20 Finsbury Street, London, EC2Y 9AQ. Post Office and the Post Office logo are registered trademarks of Post Office Limited. Our FCA Register Number is 409080. You can confirm our registration on the FCA's website (www.fca.org.uk).
Post Office Mortgages are provided by Bank of Ireland UK (BOI UK) who is a member of the Council of Mortgage Lenders (CML). BOI UK operates within the provisions of the CML’s Buy to Let statement of practice.
Bank of Ireland does not provide any recommendation or advice in relation to Buy to Let mortgages. The affordability of a Buy to Let loan is primarily based on the expected monthly income generated from letting the property to a tenant. The actual income generated may be different and can be influenced over time by changes within the rental market. You will remain responsible for meeting the costs of your loan and the additional costs associated with letting the property. It is important that you have reviewed the products above in full before progressing with an online application.