buy to let mortgages : A Good Investment.

2007-03-08 10:33:40

( Financial )



There are many types of mortgages available to suit your every need. However, one of the most increasingly popular forms of mortgage for purposes of investment is buy to let mortgages.

The housing market for owner-occupiers is slowing down, but property as an investment is very popular.

One of the ways to invest in property is the option of getting buy to let mortgages. Buy to let mortgages as an investment show such good returns that more than half of buy to let investors plan to get more buy to let mortgages in the future.

Buy to let mortgages mean you can borrow the greatest part of the value of the property – this means that you benefit from the growth in value of the entire property and not just the deposit.

This is known as “gearing” and is the reason that buy to let mortgages are so popular.

If you intend to buy to let you will need a specialist mortgage which requires quite a large deposit – some lenders ask for almost half the value of the property.

There is a lot more choice now in this particular market. Previously you could only get a commercial mortgage (which was very expensive) – but now there are many lenders offering some kind of buy to let mortgages.

If you have invested a lot in your home you could remortgage it to get the funds needed for a modest buy to let mortgage.

Letting out property is always a risk, so don’t expect a low mortgage rate for buy to let mortgages. Ask your estate agent for a mortgage rate quote in this respect. The deals will vary. You will certainly pay more than you are doing for your home but if you shop around you can find very competitive discounted and fixed offers on buy to let mortgages.

Different lenders will have different approaches.

Your mortgage could be based on your income together with the estimated amount of rent you will get.

It could be based completely on your expected rental.

The formulas differ as well.

Some lenders need the rent to be well above the mortgage payment.

Others will require it to be triple your salary plus half the rental.

Others still, base the mortgage on your salary and any other loan commitments you have – but then they apply a “deduction rule”. They will lend you considerably more than your salary or income and subtract a yearly mortgage payment figure according to a pre-determined interest level.

There are many online services which can give you advice about the best buy to let mortgages available with respect not only to value but also to your own particular needs.


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