You buy property for various reasons. You may purchase property for residential or commercial purposes. Many a times, landlords buy property specifically to let it out on rent. This is known in Britain as buy-to-let property. If the landlord takes a mortgage on such a property, it is known as a buy-to-let mortgage. Landlords, amateur and professionals alike, have taken advantage of this kind of a mortgage. |
Buy-to-let mortgage, what is it?
These are a good way to obtain a property that you as a landlord wish to own exclusively for renting out to tenants. In the 1990s, this form of lending became popular in the UK. In this type of mortgage, landlords purchase land with the help of mortgage designed specifically for this purpose by the banks. After a due compare of buy-to-let mortgages, the landlord chooses the best mortgage that works for him and purchases the property he wishes to let out.
The rates for this mortgage is slightly higher than the regular owner owned mortgage rates because the lending banks perceive that the landlord will make more money from rent obtained from these properties, compared to owners who take out a mortgage so as to reside in the property. The landlord is happy if he makes good money in rental income, if not, the bank may forfeit the property. Either way, it is a good business opportunity if you wish to become a landlord. What to keep in mind when you are looking for a buy-to-let mortgage
If you are new to this, you need to compare buy to let mortgages offered by various banks and select the one that works best for you. You may also need to check on the buy-to-let mortgage calculator for your loan-to-value ratio. You need to do a market research in order to get the best returns on your investment. Also remember to choose an area that is neither too cheap nor too expensive from a renter’s point of view. Check your numbers and get your numbers right when it comes to expected rent, actual loan and the interest you agree to pay. It is a good idea to have an insurance policy in place in case your tenant doesn’t pay up. You need to err on the side of caution and provide for a bit of time when you may not actually receive rental income too.
Various types of mortgages offered for those looking for buy-to-let mortgages
Banks usually offer many different types of buy-to-let mortgages. There are fixed rate mortgages which let you pay the same amount of interest every month. There are also offset mortgages where you can save money by linking the balance in your current and savings accounts to your mortgage.
Whichever type of mortgage you choose, it is important to note that you need to use the buy-to-let mortgage calculator to check and verify how much you can borrow and for what period of time at what rate.
Author is associated with a Mortgage Broker Firm. They are providing information on buy to let mortgages, they also provide buy to let mortgage calculator for compare buy to let mortgages and get more benefit.
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