All About Buy To Let Mortgages
The concept of buy to let mortgages has been something that became very popular during
the 1990s and the early 2000s when the property market in the United Kingdom was rising steadily, almost on a month by month basis. Such mortgages are specifically designed for the buy to let market. These mortgages tend to be taken up mainly by amateur and professional landlords.The idea of buy to let mortgages is that a person with some disposable income takes on a mortgage and then rents out the property to tenants. People who enter into this kind of financial transaction hope to make money by doing so. Often the landlord will get the assistance of a letting agent who will help with the whole process of finding tenants for the property and dealing with the management of the tenants.
People who go into buy to let mortgages hope that the value of their property rises over time. In good economic times the landlord may be able to increase the rent of their property. The best time to do this is often when a tenant moves out. The landlord can then consider charging more rent to a new tenant when the economy is in good shape. A good economy will mean that there is more money available for people to earn, and that landlords can charge more rent to tenants of residential properties. There are tax advantages to landlords who enter into such mortgages that work on a buy to let basis.
Buy to let mortgages can be a good idea in a good economy when there is less chance of tenants being unable to pay the rent. This will mean that residential landlords get regular rental payments over time. In a good economy the value of the residential property will go up over time as well. This will mean that if the landlord sells the property some years later after house prices have risen steadily, then there is a good chance that the landlord will make a profit.
Buy to let mortgages are of course very popular when mortgages are readily available. A ready supply of mortgages often happens when the property market and the stock market are rising, and when the financial system is in good health. Lenders offer mortgages for buy to let landlords in different ways. Some lenders base the amount that they will lend on the landlord's salary and their existing financial commitments.
One of the drawbacks of buy to let mortgages is the amount of property maintenance that may be needed. This maintenance expenditure could be hundreds or even thousands of pounds over a year. This is the kind of money that may be needed to be spent on the upkeep of the rental property. Such expenditure may erode the profit that is made from the rent received from the tenants. Another drawback is void periods, these are the periods of time when there are no tenants in the property and therefore no rent is being received by the landlord.
by: James JR Robinson