Buy to Let Mortgages are loans specially designed for anyone who wishes to invest in the property market by buying one or more houses and renting them out to tenants. Buy to Let Mortgages differ from previous investment vehicles by specifically using the rental revenue as the main factor when determining the ability of the buyer to meet the monthly mortgage payments. Many high street banks and building societies now offer a buy to let mortgage product. The percentage which the buy to let lender is willing to lend is likely to be restricted by many lenders to 85% of the value of a property.
Buying property to let has become increasingly popular to the UK investor. Buy To Let mortgage lenders differ in approach. Buy-to-let borrowers do have to jump through some extra hoops to satisfy mortgage lenders. The buy to let mortgage term can be anything between 5 and and 45 years. When buying to let it is important to know the market in which you will be trying to let your property.
Buy To Let Property
The more you are willing to do a property up, the higher the potential profits. There is the danger that the property could lie empty for long periods and the market could suffer a downturn. There is a real advantage if your buy to let property is close by as you will be able to manage the property yourself. However, if you are employing the services of an agent then the vicinity of your properties is not a real consideration. One rule of thumb many buy-to-let investors apply is to factor in the property sitting empty for two months of the year this gives a substantial buffer. Finding the right property is key to the success of your long-term strategy.
Buy To Let Mortgages
Popular perception is that buy-to-let mortgages are hugely expensive and very restrictive. However, the interest rates available for buy to let products is really not that much higher than a regular residential mortgage. Landlords also have a choice between interest only and repayment mortgages. To begin with, buy to let mortgage lenders do not use the applicants income solely as a basis of approval, instead they base their decision mostly upon the likely rental income that the property will achieve. Over the long term, though, both the capital value of the property and the rental income should go up, making buy-to-let a balanced investment. Usually, regular buy to let lenders will demand the rent to cover at least 125% of the monthly mortgage payments. However some specialist lenders are more relaxed and may only require 100% full coverage.
Buy to Let mortgages are not regulated by the Financial Services Authority. Even though buy to let property is a fairly safe investment taking into consideration the historical movement of house prices, you still need to check the market very carefully before going ahead with a purchase.