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Buy to let mortgages have become a very popular mortgage product in the market
over the past 10 years. Many people have become the owners of more
than a few properties as a result of taking out this type of mortgage. Most
people who enter into a buy-to-let mortgage are more than likely looking
a long term financial investment. Generally speaking the long term
gain is achieved by the property being worth more than what it was purchased
for originally, often termed the capital gain or appreciation.
What is a buy-to-let mortgage?
A buy to let mortgage allows you to borrow money against the purchase of a property with a view to letting out the property to tenants.
How do buy-to-let mortgages work?
A buy to let mortgage is simply a borrowing that you make and one that you agree to pay back over a particular period of time. Payments are still made by yourself to the provider, but you now have the responsibility as a landlord to ensure you receive a rent on the property you have just purchased. Most landlords have a rule of thumb which is to ensure the rental income received on the property is more than the monthly mortgage payments you are required to make.
Is there a limit to how much I can borrow?
Well, the short answer to that is yes. It is important that you remember that this is a special type of mortgage product designed for a specific purpose. Most lenders will generally offer you up 80 percent of the property value. In addition, the rate of interest can be expected to a little higher than a traditional mortgage, when you are purchasing your own home.
I want a buy-to-let mortgage, so what do I do next?
When taking out any mortgage product make sure you fully understand what you are about to get yourself into. Doing your research properly will certainly help you. Our check list below will help you with some of the things to consider when taking out a buy to let mortgage.
Buy to let checklist
- Make sure your finances are in order before you apply for a buy to let mortgage.
- Have you research the area where you are about to make your purchase. Is it full of students’, professionals or families? This is important as you will need to pitch your rental property at a specific market.
- How much rental income will you receive? Speak to friends or family in that area to get some insight. Call or visit a local estate or letting agent.
- Rented properties often need decorating and refurbishment, ensure you have access to specialist people like builders, plumbers and electricians.
- Ensure you account for periods where the property may not be rented, especially if you looking at going for the student market. Remember, you will still be making monthly mortgage payments.
- Make sure you have the correct types of insurances for your property and even yourself.
- Decide if you are going to handle the management of the rented property yourself or will you pass it on to a letting agent.
- Make sure the property is only rented out when it is fit for purpose. For example the heating and boiler systems have been checked and approved
The next steps!
Complete our simple mortgage quote form and we will give you access to all the latest and best deals in the market. Some deals may not even be available on the high street.