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A Laymans Guide to Buy to Let Mortgages

Aug 17, 2007
The Buy to Let property market seems to more popular than ever. In fact, Buy to Let has been steadily increasing in popularity since the mid-nineties and experts reveal that the market shows no real sign of slowing down. Buy to Let seems to be the ideal property investment; simply purchase a property and then let the tenants cover the mortgage. However, there a number of things to be taken into consideration when buying a second property which you are not planning to live in and one the most important one is buy to let mortgages.

Buy to Let Mortgages Basics

Buy to Let investment involves buying a property with the intention of making a profit through letting. There is an increasing amount of choice in the Buy to Let mortgage market and this is mainly due to the increase in Buy to Let investing. The conditions for Buy to Let mortgages differ from standard mortgages as the intended purpose for buying the property are different.

Some of the following differences should be considered before going ahead with a Buy to Let mortgage and worth speaking to a specialist buy to let mortgage about:

*Higher Interest Rates - Buy to Let mortgages usually have higher than normal interest rates.
*Rent - The lender considers your income per annum, together with the amount of rent which will be charged when letting out the property.
*Deposit - Lenders may require a higher deposit than the average standard mortgage deposit - this may be as high as 25% of the property value.

Buy to Let Intentions

Another point to consider when looking at Buy to Let Mortgages is what the main reason for buying the property is. This may sound a little strange as you are obviously buying the property to let it but people have different goals involved with their Buy to Let property. Have a look at two differing goals of Buy to Let investors:

*Make a profit from the investment in the property itself and re-sell it when house prices are high
*Aim for a month by month profit from the rent you charge

Buy to Let Costs

Regardless of the reasons you might have for buying a property you will also need to consider all the extra costs you may incur, some to consider are:

*Tax issues
*Letting Agency Fees
*Property Maintenance
*Insurance (building insurance, contents insurance, home insurance, legal insurance)
*Furnishing Expenses

Before making any buy to let property purchases you should always discuss your investment requirements in detail with a Buy to Let mortgage broker. They can help maximise the potential profit from your property investments and normally their advice is free.
About the Author
Elizabeth Grant writes exclusively for The Mortgage Broker specialist mortgage websites. To read more of Elizabeth 's articles on Buy to Let Mortgages please visit the Buy to Let Centre.
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