A buy to let mortgage is a loan to buy property for the purpose of renting it out. Housing growth, a UK population surge, and a growing student population, have motivated many people to invest in buy to let. Buy to let mortgages can be a good investment, but research before you begin.

Advantages

Because stock markets are unpredictable, property is a great long term investment. Many high street banks and building societies offer buy to let mortgages. As well, there are many independent mortgage brokers eager to offer competitive buy to let mortgages.

Mortgage Lender Assessments

Because lenders want to provide mortgages on properties that are easy to let, they will look at the anticipated rental income. The risk is that you might find yourself with a period of non occupancy, or you might have a tenant who stops paying rent. For this reason, mortgage lenders may require evidence of a sound income. Most lenders expect that the rental income on the property will be higher than the mortgage repayments.

Choosing a Buy to Let Mortgage Deal

One choice is the fixed rate buy to let mortgages. It allows the borrower to pay a set rate for a fixed period. You can calculate exactly what your future costs will be. Be aware of any penalties for early repayment that are included in some buy to let mortgage deals. When exploring a buy to let mortgage deal, check the interest rate and the APR (Annual Percentage Rate). It should include all set up fees and administrative costs. You should also be thinking about mortgage flexibility. That is, will the mortgage allow early repayment? What will happen if you face a long non occupancy period?

Types of UK Buy to Let Mortgages

Lenders may offer other buy to let mortgage loans that include Variable Rate Buy to Let Mortgage, Capped Buy to Let Mortgage, Minimum Status Buy to Let Mortgage, UK Limited Company Buy to Let Mortgage, Non Resident Buy to Let Mortgage, and Self Certified Buy to Let Mortgage. It is important to choose the type that fits your needs.

Potential Problems with Buy to Let Mortgages

1. Not setting a budget It is important to make sure you calculate the size of your deposit plus any new furnishings you may need to purchase. It is important to be able to make payments if there is a period where you do not have tenants. 2. Not protecting against future problems In order for buy to let to be successful, it is important that you consider and prepare for future problems. Make sure you protect yourself from all potential pitfalls. If you are buying an old home, get a complete structural survey or homebuyers report. Resolve any needed renovation work. Have tenants as soon the house is ready and make sure you have a tenancy agreement in place.

The Buy to Let Market in the UK

Buy to let involves an aspect of risk. However, if you are completely informed, there is no reason why it cannot work. It may be beneficial to get help from a letting agent who knows the area, the demand, and what the likely pitfalls will be. By planning carefully and purchasing sensibly, you should be able to get a property that requires minimal maintenance and is attractive to tenants.