Investing in property by means of a buy-to-let
mortgage is a very popular investment option and can be
rather lucrative. But make sure you do your homework and
invest in property that will give you a reasonable return
on your money invested. Buying residential property to
rent out privately has been hugely popular in recent years.
Indeed, there are more than 300,000 properties in the
UK with buy-to-let mortgages.
Reasons for buy-to-let mortgages popularity:
· Property is an excellent long-term
investment, especially when compared with the stock markets
volatility.
· Mortgage lenders offer competitive,
specifically designed buy-to-let packages to make life
easy for the landlord.
· Interest rates are currently low
so buy-to-let mortgages are very affordable.
· With the overall UK population
rising, growing student numbers, plus a high divorce rate
there is plenty of demand for rental accommodation.
Mortgage types
In the past, the only types of buy-to-let
mortgages available were variable rate deals. However,
nowadays thee are a whole range of buy-to-let mortgages
from fixed rate and discounts to trackers and flexible.
Buy-to-let mortgage lenders will almost always insist
that you have a deposit of 20%. So the size of your deposit
will help determine the amount you can borrow. Lenders
will also insist that the rent the property will command
covers 130% of your mortgage payments. This protects both
yourself and the lender against rental voids – periods
when the property is unattended.
Unlike residential borrowers, most buy-to-let investors
opt for interest-only mortgages, simply paying off the
outstanding capital. This is repaid on sale of the property.
