Buy to Let Mortgages

In the not too distant past anyone hoping to buy a property with the sole intention of letting it out was forced to opt for an expensive commercial mortgage. However, with the continuing boom in the housing market more and more high street mortgage providers now offer a variety specialist buy to let mortgages . In the summer of 2003 the UK buy to let mortgage market was estimated to be worth more than £40 billion, as more and more people want to take the next step up the property ladder.

Mortgage providers tend to regard buy to let mortgages as being more risky than residential mortgages and this is reflected in the overall cost. However if you're prepared to spend some time shopping around you should be able to find a good deal. Banks and building societies calculate buy to let mortgages in a number of different ways: some rely solely on the rental income while others will combine your salary with the expected rent. Similarly the amount of deposit needed varies enormously between lenders and can be as little as 10%, or as much as 25%.

Unfortunately many of the established ‘rules' relating to the pros and cons of repayment Vs interest only mortgages go out of the window. If your primary motive is to see your capital grow, and you aren't in any hurry to see the mortgage fully paid off, then you may want to consider a repayment mortgage. Alternatively, because interest paid on a mortgage can be offset against tax, you might find that an interest only mortgage makes better financial sense.

As you're letting out a property you'll be receiving a stream of income which has all sorts of tax implications. Finding your way around this legal labyrinth can prove tricky and anyone considering taking out a buy to let mortgage is strongly advised to seek professional advice.

Finding the right property and the right mortgage is only half of the job. Next you'll have to turn your mind to finding somebody to pay the rent. Many landlords decide that the best way to get the right tenants in your property is to hand everything over to a letting agent. Employing a third party will certainly make your life easier (and if you bear in mind that letting agent's fees are tax deductible) is something that's well worth considering

 

 

 

 

 

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