Buy To Let Mortgages
Before looking to secure a buy to let mortgage, you need to be sure that the property you are considering is right for the local rental market, speaking to the letting agents in the area will give you a clear idea of the types of property are in demand and the standards of the fitments that are expected.
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When investing in buy to let, most people will not have the full purchase amount of the property to invest, and so will need additional financing which will be in the form of a buy to let mortgage. Typically you will be able to secure a buy to let mortgage for up to 80% of the value of the property, meaning that you need only invest 20% for the actual purchase, even if you can fund the purchase entirely you may find a mortgage useful in order to give you the extra capital for improvements and other costs.
Applying for a buy to let mortgage is in essence the same as for an owner-occupier mortgage, the main difference being that with a buy to let mortgage the lender will take into account the potential rental income when determining if you can afford the repayments and if to approve you for the mortgage (this is usually dependant on you using an ARLA member letting agent). The term over which the mortgage is repaid will generally be between five and forty-five years, a longer term will reduce the amount that you pay each month and will allow you to gain more from your investment early on, however with a longer term you will end up paying more interest overall. You will need to weigh up you financial situation and expected cash flow when deciding the period of time over which to have the buy to let mortgage.
The lenders of buy to let mortgage will carry out the standard array of status checks on the potential landlord in order to determine their ability to repay the mortgage, the property will also be subjected to a survey to ensure that it is structurally sound and that it is worth at least as much as the buy to let mortgage it is being secured against. Provided all of these checks are passed, you should be able to secure a mortgage at a rate that is not greatly different from an owner-occupier mortgage in terms of the interest rates charged.
When securing a mortgage for you buy to let property ensure that the monthly repayments on the mortgage are lower than the amount you will be realistically able to charge for rent, generally the mortgage should be 30 – 50% less than the mortgage repayments. If you are unable to achieve a mortgage that will be less than the rental potential, then you should reconsider the property unless you see it as a long-term investment and wish to see a return on your money only when selling the property.
A buy to let mortgage can allow you to invest your money in a very profitable way, and with the rates on buy to let mortgages being similar to those on owner-occupier mortgages the costs can be easily covered by the rental charges in most cases. See out list of buy to let mortgages to help you find the right mortgage for your needs.
When looking for a mortgage, you may want to lessen the amount of legwork and research that you need to do in order to find yourself a good deal, this is where mortgage brokers can be a big help.
If you are looking for a loan in the UK, then we recommend that you visit Loans UK - here you will find the very best loan deals available.
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