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If you are considering buying a property to let out, you’ll need a buy to let mortgage in most cases. Buy to let mortgages are very similar to traditional mortgages, but there are some areas that do differ and which relate to letting your home out to a paying tenant. Finding the best buy to let mortgages deal is important so that you can ensure that your monthly rent more than covers the mortgage repayment and any other associated costs such as your letting agent and bills. It’s important to understand that the loan to value amount you can borrow on a buy to let mortgage will usually be less than you would be able to borrow on a normal homeowner mortgage. This will mean you will need to have a larger deposit to hand and this could equate to 20% of the property value or more. There are also additional fees associated with buy to let mortgages that you need to be aware of. Mortgage arrangement fees for example can often equate to 3.5% of the total loan amount. That seems like a lot but this fee can usually be absorbed into the total cost of your loan and paid for monthly in the mortgage repayment total. And the increased costs do not stop there. Buy to let mortgages are also usually subject to higher interest rates. As a comparison, normal mortgages usually command interest rates of around 5% whilst buy to let mortgages can be higher at 6%. When it comes to the assessment of your income there are vast differences between buy to let and traditional mortgages. A buy to let mortgage is usually assessed based as a percentage of the income generated from the rental – this should come to at least 125% of the mortgage repayments. Therefore, if the mortgage repayment each month is £500, your total rental income should equate to £625 or above. It’s really important that you can satisfy your lender’s criteria if you want to secure a good deal on your buy to let mortgage. The rental needs to be viable before the lender will consider making you a mortgage offer. In some cases a lender may be worried about rent arrears affecting your ability to repay the loan or they may be worried that the property will be unoccupied for lengths of time and therefore not generating any income. Before you start looking at the various buy to let mortgages on the market today why not get in touch with a financial advisor or mortgage advisor who can give you more information on the criteria that will affect your lender’s decision. You can also get advice on how to rent out your property, how to ensure you get your rent on time and other issues that affect buy to let customers. Best Buy to let mortgages money may be complex and the criteria may be tough and those are good reasons to get some professional advice. Get in touch with our team today.
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