When you are considering purchasing a rental
property, finding a right buy to let mortgage is very important.
Buy to let mortgages are not that much different from regular
mortgages, but there are slight variations. Lenders take into
account your rental income when considering your buy to let
application. Rental income may determine the amount of available
loan as majority of the lenders will want to see that your
monthly rental income is greater than your mortgage payments and
even exceed them by about 25%.Idea behind it that your buy to
let is paying for itself. The reason for additional cover is
your monthly expenses. Landlords are expected to have their
property adequately insured, pay fees to a letting agent and
take into account periods of void.
These days majority of buy to let mortgages will allow you to borrow up
to a maximum of 75% of the property value, but it is still possible to
find deals which will let you borrow as much as 85%.
Despite the fact that many lenders have disappeared from the market,
there are still many products to choose from.
When you are buying the property with the intention to rent it, you must
have an idea why you are doing it. Some investors are buying for the
benefit of a rental income, but others are not bother what they receive
on a monthly basis as long as their costs are covered. Monthly payments
on interest only basis will be lower, but you will need to be prepared
to sell your property eventually to pay off your buy to let mortgage.
Repayment mortgage, on the other side, will guaranty that you will have
a fully paid for properly at the end of the mortgage term.
If your goal is a monthly income, then it is important to minimise your
costs, but be prepared that some lenders may ask for an evidence of
repayment arrangements in place.
Previously expensive and inflexible buy to let mortgages were mainly
used by professional landlords, but today you will find fixed and
tracker rates, flexible options which allow making overpayments and
underpayments if required.
If you are new to buy to let market, then, you need to collect as much
information as you can find. Speak to a mortgage advisor, specialist
lender or your local bank, but remember while mortgage advisors tend to
look trough hundreds of buy to let deals available on the market,
lenders can only offer you their own products.
You will find buy to let mortgage application process very similar to a
normal mortgage application as lenders will do your credit score, check
your salary and verify your ID and address.
Whatever route you will choose, do your calculations, and make sure that
mortgage you have chosen is suitable for you.
