Buy to Let Mortgages
The Buy-to-Let Mortgage is a type of secured loan. It is otherwise called an Investment Mortgage. This kind of loan is designed for borrowers who want to buy property to let out to a 3rd party.
The amount that the landlord will receive in rent might be over the mortgage payments and will help the landlord to offset the management and maintenance costs of the property. This is a good investment option. It can be availed even by people with bad credit record and the lenders will not decline the proposal because of poor credit history.
The following are some of the benefits of Buy-to-Let mortgage:
The first big thing and in fact the most important thing is to find the property you want in the area you desire with the correct letting potential. Your purchase has to be financed. It is fine if you want to finance in cash, but not many people will be in financial position to make an upfront payment. In either conditions, cash payment is not the best idea. This mortgage has tax benefits as the interest of mortgage will be an offset to your income from the rent that can lower your tax bills. Hence, it is best to at least borrow some amount of money.
There are many providers of “Buy to Let” mortgage and many mortgage providers are present for prospective purchasers. But, you have give a deposit, which might be more than the mortgage deposit for your main residence. The interest rate on the mortgage will be low if you find more deposit. The interest rate will be high if the risk for the mortgage lender is high.
These mortgages need only a deposit of 10% now, which was 20% in the past. Competitive deals are offered by many mortgage lenders with interest rates higher than the mortgage on your primary residence.
There are many ranges of these mortgages and they come with flexible features. The monthly payments for these mortgages are cheaper than the main residence mortgages. These mortgages can be offset against the rental income and it can be sold to pay off the mortgage. As it will not be your main home, you don’t have to pay outstanding mortgages at the term end as you will have to stay there, the residence is therefore disposable.
Before you take “Buy to Let” mortgage you have to consult your financial advisor and even ask him to accompany you to the lender if possible.
The right Mortgage Advisers who specialize in this field will help you in finding the right deal for you.
Lenders are more interested in your property’s rental income and not on your capacity to pay based on your income. These lenders are concerned about the fact whether the rent you get from the property will cover mortgage repayments. Lenders require 130% rental income when compared to mortgage repayment. So, for example if your repayments are £500/month, the income from the rent has to be 650/ month. This will ensure that mortgage is paid with leftover to cover the maintenance costs if the property is empty for some time.