Buy-To-Let Mortgage
If you have some money of a notable amount that you are looking
to invest, you can get yourself a very good return investing in
the property market. Property can potentially be one of the most
lucrative long-term investments available. Buying to let can provide
you with a regular income in the form of rent and a large asset
with the potential to increase in value. However not many people
can afford to go around buying properties to let. That is until
the Buy to Let Mortgage came into being.
Advantages of buy-to-let
Buying to let has become an increasingly popular investment choice.
This is hardly surprising, given the recent upward surge in the
property market. It wasn’t long ago that anyone hoping to
buy a property with the sole intention of letting it out was forced
to opt for an expensive commercial mortgage. However, with the
continuing boom in the housing market more and more high street
mortgage providers now offer a variety of specialist buy to let
mortgages.
Two features make property a particularly attractive investment.
First, taking out a buy to let mortgage allows you to borrow the
lion's share of the property value. But you then keep the growth
in the value of the whole property - not just your deposit. This
process is known as 'gearing' and is the key to the attractiveness
of buying to let.
The ins and outs
Mortgage providers tend to regard buy to let mortgages as being
more uncertain than residential mortgages and this is mirrored
in the overall cost. However if you're prepared to spend some
time hunting around you should be able to find quite a good deal.
Banks and building societies calculate buy to let mortgages in
a number of different ways: some rely solely on the rental income
while others will combine your salary with the expected income
from rent. Similarly the amount of deposit needed varies enormously
between mortgage lenders and can be as little as 10%, or as much
as 25%.
Unfortunately many of the traditional ‘rules' relating
to the pros and cons of repayment Vs interest only mortgages do
not come in to play. If your primary motive is to see your capital
grow, and you aren't in any hurry to see the mortgage fully paid
off, then you may want to consider a repayment mortgage. Alternatively,
because interest paid on a mortgage can be offset against tax,
you might find that an interest only mortgage makes better financial
sense.
Finding the right property and the right mortgage is only half
of the job. Next you'll have to turn your mind to finding tenants
to pay the rent. Many landlords decide that the most convenient
way to get the right tenants in your property is to hand all dealings
over to a letting agent. Employing a third party will certainly
make your life as landlord easier. The fact that the letting agent’s
fees are tax deductible is something worth keeping in mind and
makes this option well worth considering.
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