Can you rent out on a first-time buyer mortgage?

Understanding the Rules Around Renting Out a Property as a First-Time Buyer

Most homeowners are aware of different types of mortgage products. Buy-to-let mortgages allow landlords to purchase properties they plan to rent out. But can a first-time buyer rent out a property they purchase?

What properties can a person choose to rent out?

You cannot rent out a property purchased with a standard first-time buyer mortgage unless you already own it or purchase it using your own funds. Misrepresenting your intentions to the lender can breach mortgage terms, which include clauses about how the property can be used.

What is a first-time buyer mortgage?

First-time buyers are individuals purchasing a property for the first time. These buyers may access mortgages specifically designed for first-time buyers.

Can a first-time buyer take out a buy-to-let mortgage?

Yes, first-time buyers can obtain buy-to-let mortgages, though these are considered higher risk. Lenders may require larger deposits and stricter assessment criteria.

Special criteria for first-time buyers applying for a buy-to-let mortgage

Lenders may require:

• Proof of income, savings, and overall financial health
• Age and credit rating of the borrower
• Evidence of property rental potential

Buy-to-let mortgages are usually interest-only, so repayment at the end of the term must be planned.

How are first-time buyers assessed for buy-to-let mortgages?

Lenders assess the property’s rental potential and whether it generates enough income to cover mortgage repayments plus a buffer. First-time buyers usually need a higher rental-income-to-mortgage ratio than experienced landlords.

Supporting documents to enhance application success

• Letter of reference from current or previous landlord
• Extended address history
• Wage slips or bank statements showing income and expenses

Can you rent out on a first-time buyer mortgage?

Renting out a property purchased with a first-time buyer mortgage is generally not allowed unless you obtain a buy-to-let mortgage. Lenders treat first-time buyers as higher risk, so demonstrating affordability and understanding landlord responsibilities is crucial.

FAQs

Can a first-time buyer rent out their property?

Not on a standard first-time buyer mortgage. You must either own the property outright or take out a buy-to-let mortgage.

Can first-time buyers get buy-to-let mortgages?

Yes, but requirements are stricter, deposits may be higher, and lenders assess rental income potential carefully.

What documents are needed for a buy-to-let mortgage as a first-time buyer?

Lenders may request income proof, savings, credit history, rental potential, references, and detailed financial documentation.

What is the rental income requirement for a first-time buyer buy-to-let mortgage?

The property must generate enough rental income to cover the mortgage repayments plus a buffer, usually higher than for experienced landlords.

As a mortgage is secured against your home/property it may be repossessed if you do not keep up with the mortgage repayments.