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What is A Buy To Let Mortgage?

By: James Grantworth

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A Buy To let Mortgage is a special mortgage which is specifically targeted to investors who wish to purchase property for the sole purpose of renting to tenants. They differ from regular residential mortgages since the criteria for lending is based upon the amount of rental the property can achieve instead salary income assesments. Most banks and building societies offer these products, although their are some lenders which specialise only in the Buy To Let market. Many lenders restrict the mortgage

Buying Property

Buying property to let has become increasingly popular to the UK investor. Buy To Let mortgage lenders differ in approach. Buy-to-let borrowers do have to jump through some extra hoops to satisfy mortgage lenders. The buy to let mortgage term can be anything between 5 and and 45 years. If you are considering buy to let property as an investment then it is important that you have a good understanding of the current market.

Buy To Let Property

The more you are willing to do a property up, the higher the potential profits. There is the danger that the property could lie empty for long periods and the market could suffer a downturn. There is a real advantage if your buy to let property is close by as you will be able to manage the property yourself. However, if you are employing the services of an agent then the vicinity of your properties is not a real consideration. One rule of thumb many buy-to-let investors apply is to factor in the property sitting empty for two months of the year this gives a substantial buffer. Finding the right property is key to the success of your long-term strategy.

Buy To Let Mortgages

Popular perception is that buy-to-let mortgages are hugely expensive and very restrictive. However, the interest rates available for buy to let products is really not that much higher than a regular residential mortgage. Landlords also have a choice between interest only and repayment mortgages. For starters, buy-to-let mortgage lenders base their decisions on whether or not to approve a loan on the likely rental income from the property and not the applicants' income. Over the long term, though, both the capital value of the property and the rental income should go up, making buy-to-let a balanced investment. Usually, regular buy to let lenders will demand the rent to cover at least 125% of the monthly mortgage payments. However some specialist lenders are more relaxed and may only require 100% full coverage.

Buy to Let mortgages are not regulated by the Financial Services Authority. Even though buy to let property is a fairly safe investment taking into consideration the historical movement of house prices, you still need to check the market very carefully before going ahead with a purchase.

Article Source: http://depositarticles.com/

James Grantworth is the Marketing Director for Let Mortgages Limited providing Buy To Let Mortgages with minimum capital investment. For full details of our exclusive no money down Buy To Let Mortgage deals visit: www.letmortgages.com

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