Buy to Let Mortgages
Buy to Let Mortgages are mortgages specifically designed for people wanting to invest in the property market by purchasing one or more houses and letting them out to private tenants.
They differ from other mortgages as the lender allows the rental revenue to be considered as income when considering the ability of the buyer to meet the mortgage payments.
If you have money to invest in another property and you have made the decision to buy and let then here are a few important things to consider.
Choose the Right Property One of the key points of consideration is the location of your property.
This should take up most of your time, as you will need to investigate many locations before coming up with a short list.
You can cut down on some of the work by consulting letting agents in you areas you are considering as they can give you some priceless information on the supply and demand of rental properties in the area.
As part of your research you should also consider whether there are organisations, public services or Schools/Universities nearby.
They could all provide you with a steady supply of tenants.
You should also consult The Association of Residential Letting Agents (ARLA).
They can give you contact details of ARLA-registered agents in your area and they will also have information on regulations and rental prices in your area of interest.
Once you have made a decision on what and where to buy you now need to get the right mortgage.
Choosing a Buy to Let Mortgage As a general rule most lenders in the UK will give you up to 85% of the property value.
Of course if you can prove that the rental income could cover a higher mortgage then they may also take this into consideration.
However, it's still best to come up with a good deposit.
Another rule of thumb is to try and ensure your rental income is 125% of your mortgage payments.
This will ensure you not only cover rental costs but also and maintenance expenses too.
Remember, the property is a long-term investment so don't think you'll be creating a nice income from the rent minus the mortgage payments.
Costs Involved You will obviously have done your sums and know how much rental you will receive plus any on-going costs.
Also make sure to include any hidden costs such as solicitor fees, insurance, stamp duty, and potential rise in interest rates, which could affect your mortgage.
As a landlord you will also have additional health and safety considerations so you may need to modify the property to adhere to fire regulations etc.
Conclusion Taking on a buy to let property and mortgage can be a very exciting venture.
Get it right and you could start yourself out on the road to building a very nice property portfolio.
But get it wrong and you can land yourself into a lot of financial trouble.
But if you follow the basic principles laid down in this article it will give you a good starting point on the key areas to consider before making the move.
They differ from other mortgages as the lender allows the rental revenue to be considered as income when considering the ability of the buyer to meet the mortgage payments.
If you have money to invest in another property and you have made the decision to buy and let then here are a few important things to consider.
Choose the Right Property One of the key points of consideration is the location of your property.
This should take up most of your time, as you will need to investigate many locations before coming up with a short list.
You can cut down on some of the work by consulting letting agents in you areas you are considering as they can give you some priceless information on the supply and demand of rental properties in the area.
As part of your research you should also consider whether there are organisations, public services or Schools/Universities nearby.
They could all provide you with a steady supply of tenants.
You should also consult The Association of Residential Letting Agents (ARLA).
They can give you contact details of ARLA-registered agents in your area and they will also have information on regulations and rental prices in your area of interest.
Once you have made a decision on what and where to buy you now need to get the right mortgage.
Choosing a Buy to Let Mortgage As a general rule most lenders in the UK will give you up to 85% of the property value.
Of course if you can prove that the rental income could cover a higher mortgage then they may also take this into consideration.
However, it's still best to come up with a good deposit.
Another rule of thumb is to try and ensure your rental income is 125% of your mortgage payments.
This will ensure you not only cover rental costs but also and maintenance expenses too.
Remember, the property is a long-term investment so don't think you'll be creating a nice income from the rent minus the mortgage payments.
Costs Involved You will obviously have done your sums and know how much rental you will receive plus any on-going costs.
Also make sure to include any hidden costs such as solicitor fees, insurance, stamp duty, and potential rise in interest rates, which could affect your mortgage.
As a landlord you will also have additional health and safety considerations so you may need to modify the property to adhere to fire regulations etc.
Conclusion Taking on a buy to let property and mortgage can be a very exciting venture.
Get it right and you could start yourself out on the road to building a very nice property portfolio.
But get it wrong and you can land yourself into a lot of financial trouble.
But if you follow the basic principles laid down in this article it will give you a good starting point on the key areas to consider before making the move.