The A-Z of buy-to-let mortgages

Posted by Basak Erten, April 15, 2021

The A-Z of buy-to-let mortgages

Have you got your DIP for your BTL yet? Or are you scratching your head thinking “IDK” as a mortgage professional overwhelms you with industry terms? The world of mortgages can be a bit much at times, especially when people start using jargon and expect you to instantly understand.

If you find yourself overwhelmed by all the different mortgage terms, worry not. We’ve got you covered with this A-Z of mortgage jargon. By the time you’ve read this guide, you’ll know your equity from your gazumping and will be ready to take on all things buy-to-let mortgage.

A is for APR 📈

APR stands for annual percentage rate, which is the overall cost of a mortgage once interest and fees are taken into account and added to the loan.

B is for buy-to-let 🏘️

A buy-to-let is a property bought with the sole intention of renting it out and earning passive income. But you probably knew this one already, especially as you’re browsing our site and we’re a buy-to-let lender.

C is for credit report ✔️

You will need a credit score to access mortgage deals – the higher your score, the better the mortgage products available to you.

D is for DIP 👩‍💻

A DIP is a decision in principle and relates to the lender confirming you will be able to borrow up to a certain initial indicative amount. It’s also referred to as an agreement in principle (AIP), but they essentially mean the same thing.

E is for equity 💷

Equity is how much money you have in your investment. It’s the amount that you own outright without the mortgage and, therefore, what’s available to you.

F is for fixed-rate mortgage 🔨

A fixed-rate mortgage is when the interest rate you pay stays the same for a set period of time. Most mortgage products offer two or five-year fixed rates, though you can get ones that last for up to 10 years. And while we’re on the topic, make sure you check out our five-year products, which is one of the most competitive on the market.

G is for gazumping 

If you have an offer accepted on a property, but a new buyer comes in with a higher offer which the seller accepts, unfortunately, that means you’ve been gazumped. Hopefully, gazumping isn’t something you’ll experience, but it’s worth knowing what it means.

H is for HMO 👨👨👨👩👩👩

An HMO is when you have a house of multiple occupation, which refers to a property rented out to at least three people who are not from one household share facilities like the bathroom and kitchen. If you want to buy a house of multiple occupation, you’ll need an HMO mortgage.

I is for interest only 💳

The majority of buy-to-let mortgages are interest-only, which means you only pay the interest on the loan. That way, monthly repayments are smaller, and you can focus on enjoying larger rental income.

J is for joint mortgage 🧑‍🤝‍🧑

A joint mortgage is when two or more people take out a mortgage together. This could be you and your partner or a family member or friend. Parents also use it when they want to help their children buy a property.

K is for…

Ok, so there isn’t a mortgage word that begins with K. Unless we’re spelling “cool” with a K after saying how “kool it is that you completed on your property purchase”.  🤷

L is let-to-buy 

A let-to-buy mortgage is when you have two mortgages: a residential mortgage on the property you’re moving to and a buy-to-let mortgage on your previous home, allowing you to rent it out.

M is for Molo Ⓜ️

Molo is your buy-to-let mortgage lender offering a completely digital process. Say goodbye to paperwork and hello to hassle-free mortgages in no time at all. 🚀

N is for negative equity 🔴

If the value of your home falls to a level below the amount remaining on your mortgage, it’s known as negative equity.

O is for offer 🤝

Once the lender has assessed your details and sent someone to value the property, they can give you a mortgage offer. Now the investment property of your dreams is almost yours 😍.

P is for portability 🚘

You can transfer your borrowing from one property to another without paying arrangement fees with a portable mortgage.

Q is for quote 

A quote is what you should get from the solicitor or conveyancer before instructing to make sure you’re happy with their services and pricing.

R is for remortgage 

You may already have a home that you would like to remortgage so you can access the equity it has. Or you might decide to remortgage after your initial fixed term expires.

S is for stamp duty 🖃

Stamp duty is the tax you pay after completing your house purchase. There are different stamp duty tax bands, and second-home owners need to pay an extra three per cent.

Learn more about stamp duty

T is for tracker mortgage 

Unlike a fixed-rate mortgage, a tracker tracks the Bank of England base rate, with your monthly repayments changing depending on the base rate.

U is for under offer 💷

When you make an offer on a house its status will change to “under offer”. At this point, the owner hasn’t accepted your offer and is open to higher ones.

V is for valuation survey 📋

The valuation survey is integral to the lender offering you a mortgage. They will carry out a valuation survey to check if the property is worth the amount you’re paying for it. Most valuations take place at the property, though a growing number are now online desktop valuations due to Covid.

W is for winning 🙌

Ok, it’s not an official mortgage term. But you’ll feel like you’re winning after getting the keys to your new buy-to-let house. 🔑

X is for Xylophone 🎼

Because why not buy your next tenant a xylophone while they’re living there? Then again, the neighbours might not appreciate such a gesture.

Y is for yield 💰

Yield is the return you’re likely to achieve on a property through rent. It’s a percentage figure calculated by taking the yearly rental income and dividing it by the total amount invested in the property.

Z is for zero deposit 0️⃣

While not technically a mortgage term, you’ll want to know about zero deposits if you’re about to become a landlord.

Recent articles

What’s the difference between a solicitor and conveyancer?

What’s the difference between a solicitor and conveyancer?

You will hear the words “solicitor” and “conveyancer” bandied about during the property buying process. Yet, for many buyers, this is the point where confusion sets in. They end up asking themselves, “what’s the difference between a solicitor and conveyancer?” It’s the sort of question you really need to know the answer to. After all, …

What’s the difference between a solicitor and conveyancer? Read More »

Posted by Simon Banks

April 30, 2021

Buy-to-let: SPV or personal: which one is best?

Buy-to-let: SPV or personal: which one is best?

Since the phasing out of tax relief for mortgages back in 2016, buy-to-let investors have seen their earnings decrease. And, in an effort to maximise their investment, they began exploring alternative options. That journey of exploration has mostly led to SPV, otherwise known as a limited company (ltd). The idea behind SPV sees investors buying …

Buy-to-let: SPV or personal: which one is best? Read More »

Posted by Simon Banks

April 26, 2021

Molo teams up with Uinsure for tech-led mortgage and insurance collaboration

Molo teams up with Uinsure for tech-led mortgage and insurance collaboration

Molo Finance has announced an exciting partnership with Uinsure to offer digital insurance solutions for the buy-to-let market. The cross-collaboration gives Molo customers access to Uinsure’s tech-savvy platform, which is designed to streamline the insurance process and make getting cover hassle-free. Brokers will also benefit from Uinsure, as they can offer insurance to their clients …

Molo teams up with Uinsure for tech-led mortgage and insurance collaboration Read More »

Posted by Basak Erten

April 22, 2021