When Are Buy To Let Mortgages A Good Option?

By Author: Alicia Karan
Total Articles: 34
Comment this article

There are situations when buy to let mortgages are suitable options. These are quite similar to normal mortgages and they are available at most of the big banks. If you would like to see if you qualify for such a mortgage, you should see whether you meet the necessary criteria. 
Buying a property and renting out is smart, for it enables you to earn money. However, it is wise to know what to expect from this process.

Who Qualifies for a Buy to Let Mortgages?

There are certain conditions you must meet to qualify for https://ukmoneyman.com/buy-to-let-mortgages/ buy to let mortgages :
•    You would like to invest in a house
•    You know the risks involved in investing in a property and you can afford to take them.
•    You already have a home
•    Your credit record is good and you do not have debt on your credit cards
•    You earn at least £25,000 per year; this is probably one of the most important criteria for no lender will approve such a mortgage if you gain less
•    Most lenders have certain upper age limits; if you are older than 45 ...
... or 50 you probably do not qualify for most mortgages are for 20-25 years.

What Are the Differences Between Buy to Let Mortgages and Ordinary Ones?

There are some differences between normal mortgages and buy to let ones:
•    They come with higher fees
•    They have higher interest rates
•    The required minimum deposit is 25% of the total value of the property
•    They are interest only
•    The amount of rental income you can receive influences the maximum amount you can borrow
•    The rental income should be higher than the mortgage payment with 25-30%.

What You Should Keep in Mind Before You Apply?
 
It is not easy to be a landlord; this involves time and numerous expenses. Due to government measures, owning a property is less attractive than it used to be. To be a buy to let landlord, you have to consider the following:
•    You have to apply for a buy to let mortgage to buy the property; these are usually more expensive than residential ones.
•    Respond to calls about problems in the property
•    Deal with the requests of the tenant
•    Finding tenants 

What Are the Challenges of a Buy to Let Landlord? 

Having a buy to let property involves certain financial risks; this is suitable for people with a good financial situation. As a landlord you have to be prepared to deal with certain unforeseen expenses. Managing a property requires time and this is something you should be prepared to deal with this in the long-run. 

This type of investment is not suitable for everyone. It is possible to make money when having a buy-to-let mortgage. There are certain charges to be met such as 3% stamp duty surcharge, the income tax on the entire rental income. To receive such a buy to let mortgage you will be required to place a big deposit. You will need at least 5% of the entire price of the property. Other costs you should consider are maintenance and insurance costs. To make money as a buy-to-let-landlord, you have to make at least £ 25.000. Individuals who have never owned a property might not qualify for this. 

How to be A Successful Buy to Let Landlord?

It might be tempting to apply for buy to let mortgages, but it is important to know what to expect. You should be familiar with what this involves and what you can do to avoid significant losses. Also, it is important to be sure that there is a demand for rentals in the region of the property you are considering. According to an interesting article in The Times, "On the other hand, there is still money to be made in buy-to-let. "

It is in your best interest to let the property quite fast so that you can make money. Also, you should keep in mind that selling the property is not wise for you might suffer a significant financial hit. Do your research so that you know what to expect and so that you can make money. After all, this is the whole point of it. If you https://ukmoneyman.com/ visit our website you will find all the information you need on mortgages. 

What Are the Advantages of Buy to Let Mortgages?

If you would like to increase your returns buy to let mortgages might be just what you need. These require a significant financial investment but they offer the following advantages:
•    Capital gain- there is no saying whether the value of the property will go up or down, but owning a property in the long term has been beneficial for investors.
•    Source of income- provided you rent the property and you have tenants all the time you will have an additional income; however, you have to take into account the ongoing maintenance costs of the property.
•    Demand- there is a growing demand for properties that can be rented; numerous people prefer to rent instead of buying a property and this is to your advantage. 

What Are the Risks of BTL Mortgages?

Investing in a property in UK is usually worth it but you have to be aware of the pitfalls. These are as follows:
•    Increased stamp duty- there is a 3% surcharge for all owners that already have another property
•    Rental voids- it is ideal to let the property all year round but you have to consider the fact that there might be a period of rental void. This will impact your finances.
•    Non-payment of rent- dealing with a problematic tenant that refuses to pay rent is a challenge and sometimes this might involve legal costs.
•    Drop in property value- the value of your property can go down and when you finish paying off the mortgage the property might be worth less than it did when you bought it. 
•    Legislation- it is difficult for tenants to stay on top of legislation so that they avoid significant fines; you have to know the legislation to fulfil your legal responsibilities. 

Why You Should Choose a Buy to Let Mortgage?

If you already own a property and you need an additional income, a buy to let mortgage might be the solution you were looking for.  However, renting a property, managing it and making money is not as easy as it sounds. 

Alicia is a professional writer for ukmoneyman.com. Having a mortgage broker by your side will give you the chance to be informed of the options that are available to you based on your financial and personal circumstances. If you are looking for a fast and friendly mortgage tips you are in the right place, visit our website for more details.