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Buy To Let Mortgages: Long Term Investment On The Concrete Structure.
By: Amanda Thompson
Buy to let mortgage market was worth £21.8 billion in 2004 and accounted to 38.2
% of commercial market in the same year. The buy to let market has grown more
than any market as a whole – which is remarkable. Such a strong market spells
nothing but benefit to mortgage hopeful. Buy to let mortgage was a constructive
effort by The Association of Residential Letting Agents (ARLA) to encourage
growth in the private rented sector.
Buy to let mortgage is a specialized product for a special mortgage product.
However, there is little difference between this and other mortgage products. If
you understand the various details of buy to let mortgage, there is no way that
you won’t be successful in your attempt. Every buy to let mortgage will undergo
the usual mortgage guideline. The lender will check your credit worthiness,
value of your property, the amount of down payment before he approves your buy
to let mortgage.
Buy to let mortgage have emerged as an increasingly popular mortgage in last few
years. They are marked lower interest rates and have added to their attraction.
Also rental income is more dependable form of income than other investment
forms. The Association of Residential Letting Agents (ARLA) operates a buy to
let scheme which is supported by a group of lenders. There are other buy to let
mortgage lenders who operate outside the scheme and you don’t have to go through
any ARLA agent.
A buy to let mortgage lender would ask for your rental details along with your
income. There are some mortgage lenders who will allow you to add your rent to
the salary, while other will base the buy to let mortgage entirely on the rent.
Any previous mortgage will have a say in what you can borrow with buy to let
mortgage. Different lenders will have different criteria which apply also for
the amount you can borrow. The maximum that you can borrow will be anywhere
between £150,000 to £1m per property. Buy to let mortgage can be taken on more
than one property with maximum up to 5 properties. But more than one buy to let
mortgage would not be possible on the same property.
Buy to let mortgage lenders usually lend 85% of the property value. Buy to let
mortgage entails down payment. The down payment varies from 15%-25%. The larger
down payment you can avail the better deals. There is a little variation in the
rates of buy to let mortgage and other mortgages. The rental income formula
varies but usually rental income should be 130%-150% of total monthly
repayments.
The interest rates offered for Buy to let mortgage are fixed, variable, capped,
tracker, capped, discounted. According to the inclination of the borrower, any
interest rate type can be applied for. Always ask for quotes and compare. This
will enable you to sort out buy to let mortgage that corresponds with your
expectations. Research is fundamental in every loan process including buy to let
mortgage.
Buy to let mortgage is a secured loan which means that it is secured on your
property. Late repayment will show in your credit report and inability to repay
can lead to loss of property. Think before you apply for buy to let mortgage.
First check affordability and then apply for buy to let mortgage. Since it is a
long term investment, you have to be careful about making payments on time.
Since you have rental income, it will enable you to payments during difficult
circumstances. You can take deposit form tenants to make prevent making arrears.
We good record with buy to let mortgage will open doors for more investment as
buy to let.
Before Buy to let make sure which property you are buying and whether it is
compatible with the area. The neighbourhood should be such where there is
considerable scope for letting it out. Plan out how much you are ready to pay
for the property, keeping in mind expenses like down payment, stamp duty,
evaluation fee, solicitor’s fee and other expenditure like remodeling to enable
anticipated usage.
A few years ago buy to let mortgage was something which would cost you higher
interest rate, larger down payment and expect large penalty for changing
mortgage. However, the buy to let orientation has changed considerably. Buy to
let mortgage has considerably moulded itself to become more consumer friendly.
In such a stable mortgage market, there is great scope for expansion.
About the Author:
Amanda Thompson holds a Bachelor’s degree in Commerce from CPIT and has
completed her MBA from IGNOU. To find a Personal loans,bad credit loans,Debt
consolidation,home equity loans at cheap rates that best suits your needs visit
www.chanceforloans.co.uk
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