Most buy-to-let or BTL mortgage lenders base their lending decisions on the amount of rent the property will generate. Many lenders want rents to cover 125% to 145% of the mortgage payments before they will accept a loan application. They do not take any other income from landlords into consideration. This is normally called a stress rate and can be applied differently based on the lender or the customer.
If a landlord wants a commercial mortgage over a short period and has other income to pay the higher monthly repayments, then rents alone will not cover 125% of the repayments. Some landlords have formed limited companies to purchase property as companies do not face the same restrictions as individual landlords. Plus, there are some tax benefits to a mortgages under a limited company.
Landlords that can show that the rents, plus other income sources, can easily cover mortgage repayments can now obtain commercial mortgages. A commercial mortgage broker will be able to perform the initial assessment on whether the borrower can afford the loan, and then find a specialist lender that is prepared to take into account both rental and other income received by the landlord.
The buy to let market has seen a boom in recent years. However its important to understand the terms and risk of the mortgage.