There are a few factors that will typically determine how much a lender will be willing to let you borrow to fund your buy to let property purchase.
The most important one is the amount of rental income you expect to earn from tenants renting the property, as this will be used to cover your monthly mortgage payments.
Lenders usually expect your rental income to be equivalent to at least 125% of your mortgage payments, but some require it to be 145% of your payments. If you’re not sure how much rental income the property you want to buy can achieve, it’s a good idea to speak to local lettings agents and find out how much similar properties are let out for.
Some lenders may take other income sources into consideration as well, but the anticipated rental income is usually what they’ll base their affordability calculations on. They will want to see you have some other income coming in though, and will also want to check your credit record, to see how you’ve managed debts in the past.
Another important factor is how much you are able to put down as a deposit on the property. Whereas residential mortgages can be offered if you have a deposit as low as 5% of the property value, buy to let mortgage lenders will usually expect you to put down at least 20% or 25% of the property value. This is because, from their perspective, a buy to let mortgage is much riskier than a residential mortgage.
Bear in mind that arrangement fees often tend to be higher on buy to let mortgages as well – normally these will be expressed as a percentage of the mortgage, so it’s well worth crunching the numbers to see how much you’ll have to pay.