Buy-to-let mortgages differ from a typical residential mortgage in several ways:

1. Deposits are usually higher, at least 25%.
2. Interest rates are higher.
3. You may be charged for product fees paid up front, however, you may be allowed to add this onto your mortgage.
4. Your mortgage is based on how much rental yield your property is expected to gain. Lenders recommend your rental income to be between 125% to 145% of your mortgage payment.
5. Your stamp duty will be higher, however, it is based upon the value of your property.

Interest-only mortgages involve paying only the mortgage interest each month until you have repaid the entire mortgage. You will still have to refund the original amount you borrowed at the end of the mortgage. If you are planning on selling the property, interest-only payments could be an ideal option as you will pay smaller monthly figures, although you should expect some additional conditions.

However, be aware that if the housing market crashes, you may be at risk of making a loss on your property and be required to pay the initial amount you borrowed. Therefore, lenders will ask you to provide details on how you will pay the mortgage back.

Repayment mortgages are higher every month because you pay a proportion of the original amount and additional interest. However, your debt will have been completely paid off at the end of the mortgage period.

Fixed interests are agreed at a certain rate and remain at that rate despite fluctuations in the Bank of England’s base rate that may influence your lenders rate. Variable interest rates move up and down when your lender increases or decreases their interest rate, usually in the like with the Bank of England’s base rate.

Fixed rates are often associated with upfront fees, either charged as a percentage of the amount borrowed or a lump sum.