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Buy to Let Mortgage
Buy-to-let investments have become increasingly popular in the recent years in UK, while some observers warn that the market is on the wane. Buy to let means, where an investor purchases a property with the intent of letting out the premises. New developments can be flooded with buy-to-let investors and when these properties come onto the market at the same time, they could drive down the rental yields.
Properties could range from a one bed flat to a large house for multiple occupancy, although all lenders will not be willing to consider this type of property. Some property types could be more desirable to lenders than others.
If you are new to this market it could be worth checking with a Buy to Let specialist such as Landlord Mortgages as to the most popular types of property in order to get the best deals to choose from.
Popular perception is that buy-to-let mortgages are hugely expensive and very restrictive.
Although there are mortgages available for more buy to lets, majority of the lenders will lend only 85 per cent of loan to value while some may have a limit on the number of properties or maximum amount of borrowing a borrower may have with a lender.
To assess the amount of mortgage they will lend to the borrowers, the main criteria many lenders use is the rental income as this must exceed the cost of the mortgage repayments. Different lenders have different calculations from 100 per cent to 125 per cent of the interest only monthly payment.
A property bought for multiple occupancy is known as an HMO and investors buying these types of properties will have to obey the rules and regulations set out by law to protect the tenants i.e. fire doors and exits. Failure to do so can result in heavy fines. |
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