UK Buy to let Mortgages - Mortgage Advice

What are Buy to let Mortgages?

Average property prices went up by about 15% in 2001. Meanwhile, the stock market fell by more than 15% in the same period. Now, whilst both these figures are not sustainable, and are likely to be less volatile in 2002, how can you ignore an investment which is so attractive compared to the stock market. The fact is that whilst no-one really knows what will happen with the stock market over the next few years, it is almost certain that property values will increase, thus making it a good and safe long term investment, whilst occasionally being a nice short term one as well.

Because of this, at the end of 2000 there were over 110,000 outstanding buy to let mortgages covering over £8 billion of mortgage debt. At the end of 1999, there had been only 64,000 loans worth just over £4.5 billion. Property investment became the place that people ran to when the dot.com bubble burst and they were looking for a safer place to put their money. Others had bought into property with the pensions mis-selling scandal in the late 1980s which put many people off using pension funds to provide for retirement altogether.

Buy to let is a good opportunity for good capital growth to the fact that should you find good tenants you will have your monthly repayments on your mortgage covered by their rental yield.

Should you be considering buying a property to let out, it is more than likely that you will already be a homeowner. If this is so, you will probably have a mortgage, and at the very least not be a mortgage novice. However, that doesn't mean the step into the world of buy-to-let is simply an extension to your current mortgage. Buy to let mortgages are different, and are suitable for certain people and in certain situations. This type of investment can help you make the most of your money, but you can also lose some too, should you not do your research before your investment and make bad decisions after.

You should make sure that you find a good location that is close to local facilities like restaurants and shops as well as public transport links. You can find a wealth of potential tenants knocking at your door should you buy the cheaper properties in university towns or big cities. However, should you buy close to a university, you will have to budget for no income in the summer months when demand will drop during the holidays.

You can get all different kinds of buy to let mortgages, the difference being the way the amount you can borrow is calculated. This will depend on the size of the rental income expected. You should also expect to pay a larger deposit than with a residential property.

What are the dangers of Buy to Let Mortgages?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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