Buy To Let Mortgage

If you’re considering trying your luck in the property market, it’s very likely that you’ll be giving due consideration to a buy-to-let mortgage. But you should understand that becoming a private landlord is a complicated business.

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By investing in property, it’s possible to secure a second source of income through rent payments from tenants. Alternatively, you can place your hope in the hands of capital growth and the increasing values of properties across the land. In some cases, we can rely on both. And these possibilities are by far the most appealing for willing investors.

So why, you’d be expected to ask, are we not all busy scrambling together our own buy-to-let plans?

The buy-to-let mortgage is distinctly different from any other. For a start, you can expect to lay down a much greater deposit on the standard package. It’s common to pay at least 20% of the property’s value upfront. This often scares off the newer buyers, but there are other variables to consider too.

Most buy-to-let mortgages come with slightly higher interest rates, and you’ll need to work this in to your budget before committing to a deal.

Where is the property market heading? While it’s no secret that in the current market, house prices are rising quite spectacularly - can that really continue forever? Some might say that it could, but it’s far from a fixed deal.

If you’re investing in a mortgage on the sole basis that you expect a good deal of capital growth, you’ll need to do your research carefully. Study the area and take note of its fluctuating prices. If you’re looking at a region which is set for major renovation, the likelihood of rising prices is much greater. But opposite trends apply and you should watch out for property where the growth has already been pushed to its limit. We don’t want to get trapped in a downward curve.

Don’t sign up for a buy-to-let mortgage without looking beyond the basic costs of the repayments. By investing in a second property, you have to be able to maintain that new home - not just pay the mortgage. Can you afford the electricity and water bills? How about the agent fees and the insurance?

In order to establish whether buy-to-let is right for you, evaluate the current market and determine how much you could expect to reap in terms of rent from tenants. Most experts will suggest that you seek rent in the 130-140% region of the mortgage repayments. By doing this, you can cover any unexpected circumstances, and of course, get what you came for in the first place; a nice profit.

In the current world, pensions have lost value and are no longer seen as a viable retirement plan for many of us. People are looking for investment plans to help them through their later years. A buy-to-let mortgage can suit this need, and if you’re good at the game, you can make a tidy second income on the side. But do take heed and look in to the credentials of the area that you’re investing in.

Use our free search service for buy to let mortgages by visiting our
mortgage centre