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 Buy to Let Mortgage Company's
OCIS
provide general financial information, we urge you to consult an
Independent
Financial Adviser ( IFA )
before making any important decisions about your finances. |
