Buy-to-Let UK Mortgage
With the recent continued rise in house prices, more and more
people are finding it hard to go a foothold on the property ladder
in their chosen location – meaning that renting is the only
option available to them. If you are in a position where you can
afford to invest in property then the potential to earn large
revenues from these rental deals is extensive.
 
With a traditional mortgage, the lender will look closely
at your yearly income to determine how much, if at all, to lend
against the value of the house. Buy to let mortgages are often
different in this respect, with many lenders taking into account
only the rental potential of the property to judge whether the
repayments could be met by the borrower. Due to the nature of
this type of mortgage (they are in effect seen as a business venture),
lenders will typically charge a higher rate of interest and require
a higher deposit than for standard mortgages.
On buy to let mortgages, it is common for lenders to require
20-25% of the value of the property as a deposit, so the start-up
costs for getting a rental property running can be quite high
and you need to be aware that you will need a large lump sum ready
to invest.
There are two main ways in which to make money out of a rental
property, the first and most obvious is through the monthly rent
from tenants. This method will give you a regular monthly income
as long as you have tenants in the property – you should
be aware that your investment may be costing you money for periods
of time when tenants cannot be found. In order to cover themselves
for these lean periods, most landlords will aim to charge around
135% of the monthly costs to them, giving them a monthly profit
as well as money to cover costs between tenants.
A second way to earn from a buy to let investment property is
capital gains – this relies on the property increasing in
value over the time of ownership, and selling when the market
conditions are right to earn a lump sum profit from the venture.
Obviously this will be a longer term plan, and in the interim
you should expect to make money from the rental charges, this
approach is often best in up-coming areas where rental potential
may not be as high but the property is likely to rise in value
in the medium to long term.
Purchasing a property with the aim of generating a profit is
not something that you should take lightly, there are a number
of areas of responsibility that you should be aware of, below
is brief coverage of the main areas of note.
You will be liable for any injuries that your tenants incur through
faults with the property, for this reason it important that not
only do you ensure the proper upkeep of the building, but also
that you take out some form of public liability insurance just
in case such an event occurs.
Legal insurance is also a wise option, as in some cases you may
encounter trouble evicting non-paying tenants, this can be a long
and therefore costly process, often requiring court intervention.
By having legal insurance in place, the only cost to you in this
situation would be from lost rent for the time taken for the forced
eviction process to complete.
If you take into account these issues, along with maintenance
costs, and are in a position where you are able to put up the
required capital, then you could well stand not only to earn a
good monthly return, but you may also see a long term gain if
you come to sell the property at a later date. A buy to let mortgage
could be the key to a second income and the financial freedom
you desire, so get in contact with out recommended specialists
today for the best deal.
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