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Mortgage Information - Buy to Let Mortgages


Buy to Let Mortgage


Purchasing A Property

Purchasing property to let is a popular choice for an increasing number of people. Here in the UK the workforce has become flexible and the need for businesses, individuals and families to move with ease is essential. Social attitudes have changed with many young people renting and not buying. Buy-to-Let is a joint initiative between the Letting Agents and Mortgage Lenders. The Buy-to-Let scheme is designed to help private individuals invest in property to let without being penalised by mortgage surcharges or paying commercial interest rates. Mortgage lenders in the scheme will take account of rental income likely to be achieved from a property.

To afford to purchase a property in order to let it out, you can get a buy-to-let mortgage product. This used to be extremely difficult, lenders did not like the risks associated with property investors. Borrowers had surcharges, high rates and various other ways of putting them off. Nowadays there are over 40 lenders who offer the product, and you can even get some pretty good rates. Discounted, capped and fixed rates are also available.

Success can be partially determined by quite a few factors. Location of the property is important, as well as the type of property. Stripped wooden floors are popular with tenants, and storage space is helpful, as are good quality appliances and fitted wardrobes. However, 50% of the market these days are properties that are unfurnished, so how you equip and furnish the property is not the main factor.

Market conditions also determine the success of your investment. It all depends on the demand for rented properties, should demand be low, you may have to charge lower rents in order to attract tenants meaning that your income will be affected. If demand is high, you can charge high rents and make a good deal of money. In the long term there will be peaks and troughs, so your yield should balance out. Add to that the appreciation in the value of the property, and you can see how properties can be a sound investment.

How much to charge in rent? Well remember you have to pay for maintenance and estate agent fees, so it is advisable to charge rent at 150% of the cost of the mortgage.
British mortgage lenders usually discriminate against providing mortgages to people who do not live or work in the UK. This is mainly due to the fact that their mortgage approval systems are geared very heavily towards advice from the UK Credit Reference Agencies and the lenders reliance on applicants having a provable source of UK income.

List of Major Mortgage Lenders

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