Everything That You'll Need and Require to Gain a Buy To Let Mortgage
Everything That You'll Need and Require to Gain a Buy To Let Mortgage
Buy to Let Mortgages are exactly what they sound like, you buy a property specifically to let out on the rental market. Under a standard mortgage, it would normally not be allowed to use the property in the rental market or to be used for a business.What Does a Buy To Let lender require? - As with a residential mortgage, an investment property still provides security for the mortgage. However, unlike a residential mortgage, a lender will generally require a rental valuation to be undertaken on a property. They will want to know what rental income the property can expect to receive, as this is how you are likely to be funding your mortgage payments. Lenders who are entering into arrangements with buy to let mortgage borrowers will still usually require that the borrower have an income. Should the property be empty for any period of time, the lender wants to be sure that you can still afford to repay the mortgage. Most tenants tend to have short term let's so the likelihood of properties standing empty for some part of the time of the loan is high. The Advantages of Buy To Let - Buy to let means that you don't have to pay the mortgage yourself, as the rental payments will cover that for you so long as the property has tenants in it. This increases the value of your investments as you're not paying much money into it yourself. Until the Credit Crunch in 2008, Buy To Let's were incredibly popular as house prices sky rocketed in price from the 1980's onwards, 90% added value in some cases was not uncommon. With the drying up of mortgage availability and the house prices contracting, they have dropped off sharply and as of the time of writing, are still to recover. How Much Deposit on a Buy To Let? - Currently you can expect to be asked for a minimum 25% deposit from lenders, when that will drop is anyone's guess. But as But To Let's are normally second properties, it signals most landlords have money to burn, so if you're a newcomer to the market, you have a uphill battle. Those seasoned in the market just have to work that bit harder to find an agreeable mortgage.Research! Research! Research!- We can't stress this enough, always shop around for the best mortgage rates, if you think you have a found a killer mortgage rate, keep looking just in case.Cover The Building - Most lenders will require that you take out buildings insurance so that if any damage is done to the building, it's covered as the property is the security for the buy to let mortgage. This will also protect you as you won't have to foot the bill for certain structural repairs like broken roof tiles and windows. Location is Key - With Buy To Let, this becomes even more important. There's no point having a rental property in an area no one wants to live, research the most sought after areas and try and buy a property in or around this area. Most landlords will target student areas but these aren't just the only areas/tenants you need. Get Insurance - Tenants, however nice they are, will never look after your property the way you would. They won't mean to scuff the skirting board or spill wine on the carpet, but they will. You will need to get an insurance policy that covers the building and its contents to make sure than being a landlord doesn't cost you more than you actually make.