Buy to let mortgage

Property as an investment requires a different type of mortgage

It is an indisputable fact that there is money to be made in the property market and for those of you wanting to purchase property on a buy to let basis, if you haven’t done already done so, isn’t about time you considered a buy to let mortgage?

Why take out a buy to let mortgage?

When applying for a buy to let mortgage it is important to remember that most providers will already expect a borrower to know that the gross rent should cover at least 130% if not 135% of the mortgage repayments.

Before you go any further you’ll need to decide the purpose behind your purchase. A buy to let mortgage allows you to make the initial purchase but it will be up to the individual to decide whether this is a long term investment resulting in capital growth or whether you are looking for a more short term benefit by way of a second income. These are key factors which will affect the type of property you purchase and where you purchase it. Buy to let is not a get rich quick venture!

There are tax advantages to making your buy to let mortgage an interest only mortgage as you get taxation relief on the interest payments you make. You may think about a fixed rate mortgage hence you know exactly the cost to you each month.

A buy to let mortgage generally has a slightly higher interest rate and the purchaser will be required to put down a larger deposit and in some cases up to 25% of the value of the property. Many people see renting out property an easy way to make money but embarking on this venture should not be taken lightly and there maybe addition costs attached to your initial investment ranging from legal fees to home furnishings.

There are of course risks attached when investing in the property market. Over the past few years, house prices have risen soared and it is predicted the market could see a slump. However, at present the benefits attached to renting out property out weight the negatives.

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