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Mortgage Glossary
overseas real estate
Buy to Let Mortgages
 
Buy to let mortgages are the perfect way of increasing your personal income, especially when you are a property investor. It can be used as a long term investment, by simply buying a new property and giving it to rent. Time increases the value of the property, which purpose is renting it out to tenants.

Buy to let mortgages offer great asset plans, sometimes by simply releasing the equity of the property. These are known as equity release plans. The advantage of a buy to let mortgage is that the rental earnings are used to pay the monthly mortgage payments. Once the mortgage payment is complete, you still have monthly profit from the rents. When you decide to keep the properties the rent income is yours, and you have a life long profitable deal. These kinds of investments are often used as a retirement income.

Even if the buy to let market is open to every investor, it is more difficult to break in the business as a beginner then an experienced professional. In order to apply for a buy to let mortgage you must prove to the lender company that you can cover the renting income by your own earnings. In most cases the property is valuated before the lender approves the buy to let mortgage. The monthly rental sum must be at least 1.25 times the mortgage payments, but some lenders might ask for even more. The valuation is meant to determine whether the property is good enough, so that the expected rental income is going to be achieved. In case you have an uncertainty regarding the potential renting income, you should pay for an impartial, objective, independent valuation of the property, before choosing any type of mortgage. No lender will approve a buy to let mortgage that has a too low rental income.
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Let us see some of the important aspects of buy to let mortgages. One of it is choosing the ideal Buy to Let Property. Being a landlord has several benefits, such as immediate profit, building equity, and boost your monetary capital. It is the choice of those who try to build up a professional career, follow a retirement plan, and secure their monthly income. Whatever your reason is you must take in consideration the followings: the tenant’s perspective, and easy maintenance perspective. Firstly think about the tenants needs, requests, desires, in order to make your properties so attractive, that those tenants can’t resist to the temptation of renting it. It is not easy to choose appealing houses, especially when you tend to be emotionally attached of the property. You must eliminate all kind of affection, and apply for houses that are going to be profitable to your business and raise capital. Besides you are not going to live in it, only rent it. As a true professional you must detach what is your home, and what is your business.

You must consider the point of view of the tenant, considering is the house in a safe neighborhood, are there enough bathrooms, are there other rental properties in the area, who is the ethnical majority in the region, etc. these are only one of the many questions you must seek an answer before engaging yourself into any kind of property acquisition. Once these questions are answered, and you are in the possession of the house you can move to the next step: maintenance. You don’t want to burden yourself with time and money consuming features, decorative elements that are difficult to maintain. You want something simple, easy to sustain and fairly expensive.

Tips that make your Buy to Let Mortgage business successful:
  • The buy to let mortgage loan is usually the amount of money likely to obtain from rent. The loan is no longer calculated according to the earned income.

  • You are going to need a deposit of at least 10 percent, but some lender banks, firms may ask for even more.

  • Buy to let mortgages can be interest loans or repayment loans.

  • It is vital that you totally explore the location of your future properties. The more appealing is the area of the purchased properties, the more likely is to get better loan terms, higher rental rates, and behold a prosperous long term investment.

  • Make sure you are going to be capable of collecting rental rates that are high enough to pay the mortgage and fulfill the condition and terms of the loan.
Buy to let mortgages have a slightly higher interest rate then those for residential properties. The terms and conditions of the mortgage differ with each lender. Before committing yourself to any of it, you should prudently search for the best offers, and the lender which reaches the most of your expectations. You might be able to borrow a larger amount of money, due to the fact, that in time your rental income will increase. Before jumping into a buy to let mortgage seek professional guidance, and put some effort into planning and researching, in order to accomplish success.