Buy-to-let Mortgages
The buy to let property market has increased rapidly over the past few years and as such the buy to let mortgage market has become extremely competitive. Purchasing a property that is to be used only for the rental market can reap rewards. If you are looking for a mortgage to fund the buying process, a specific buy to let mortgage will be able to offer affordable finance.
A buy to let mortgage is a financial product that lenders have tailored to meet the needs of this growing market. Using the buy to let process is a good way of providing long term financial investment, however, you must consider that for periods of time there may be rental vacancies while your property remains unoccupied. If you have periods of long term occupation within your buy to let properties, you will always have a steady stream of income.
Buy to let mortgages have become extremely popular, therefore, many of the traditional high street lenders have become competitive in this market. There are also specific buy to let mortgage companies that have been set up on the internet designed to target this particular form of lending. These companies will also offer lending not only to standard borrowers but also have the facility to offer mortgages to people with a poor credit history.
When applying for a buy to let mortgage, lenders will typically look at the rental potential within the property that you are purchasing. They will assess how much rent you can charge and then base their lending decision on these criteria. Depending on lender, your income can also be taken into account, not many lenders use your income as well as potential rental income base their decision on, therefore it pays to shop around if you require this facility.
The lender will typically be able to loan you 80% of the property value, leaving you to find the additional 20% of the loan total. Depending on lender and your own circumstances, you may be able to borrower more than the minimum 80%. However, in general these types of mortgages require a larger deposit. Lending can be issued over a minimum of five years and depending on lender, up to a maximum of 40 years.
Interest rates on these mortgages are usually higher than a standard mortgage rate. However, many lenders offer a selection of rates that can be used for these mortgages. You can choose from fixed rate, variable or even tracker rates depending on what is right for you. The lender should be able to offer you advice on which mortgage rate you should choose depending on your circumstances. You can also choose to repay the loan on an interest only basis or capital and interest and some lenders offer you the chance to combine the two options together as a repayment method.
Arranging a buy to let mortgage is much the same as a standard mortgage. You will have to provide the same personal and financial information to enable the application process to begin. The relevant lender will then complete their standard credit checks before they can even consider proceeding further with the application. This allows the lender to assess your suitability with borrowing this type of loan and also whether you will be able to afford to repay the loan should you have no rental income on the property for any reason.
With these kinds of mortgages, the lenders can impose a booking fee to secure the selected product and to arrange the mortgage for you. This varies from lender to lender and if this is something that is important to you then it is wise to check with each lender. Depending on which buy to let product you select, you can also incur charges should be able to repay the loan in full earlier than the agreed period.
If you wish to apply for a buy-to-let mortgage, you can apply
today with our parent site Loans UK or view our recommended
list of buy-to-let mortgages.
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