A buy to let mortgage is a type of mortgage loan obtained to buy a property. The property is obtained to be let out by the buyer. With this type of mortgage you would typically pay mortgage interest only and can be used for up to 90% of the estimated value of a property.
Landlords building insurance is not only a requirement by your buy to let mortgage company by also for your own protection if something was to go wrong. A good policy should cover your liability to tenents and also the cover of rebuilding your property.
Landlords house insurance, which is a separate policy will cover emergency eventualities such as leaking roofs and blocked drains. It is normally up to your tenent to take out household contents cover. Unless your property is rented out furnished. A Buy to let mortages company normally make this very clear when you complete with them.
A buy to let mortgage sum is allowed to be spent on the purchase of more than one property and with this type of loan (after paying interest every month) you pay off the rest of the mortgage sum if you eventually sell the property.
Banks and investors want to expand and promote the private housing market. This is why the policy that was maintained a few years ago (charging those who buy a property to create income for themselves a higher interest rate and lending fee) has been changed significantly.
Only paying interest on a mortgage loan helps to keep expenses at a minimum so that the owner of the property (the landlord) can earn money on his investment. However, buy to let mortgages do usually have a slightly higher interest rate than normal mortgages.
Before you think of buying a property for letting it is very important to consider every single detail before you buy. The common return on a buy to let property varies between 7 and 10 percent. This is the return after all expenses such as landlords building insurance have been deducted from the gross income generated by a property of course.
The average rent that should be taken by a property owner should be about a 120-130 percent of the mortgage repayment. This is the standard minimum rent payment that should cover all your costs.
A professional letting agent will be able to advise you on the best buy to let mortgage plan available for you. There are slight differences in interest rates and the small print on the loans on the market.
A letting agent is also the right person to talk to when it comes to releasing your property onto the market. He or she will know how to find the right people to rent your property and will be able to sort out all the details with your prospective new occupants and they understand the market when it comes to pricing.
Knowing the area in which you are purchasing a property is the most important factor when it comes to buying to let. If you do not know your area you might end up with a buy to let property that people simply do not want to live in.
Buying properties to let and making money from it can be a lot of fun if you know how to pick your properties and if you find the right buy to let mortgage plan. Find a property with the right price and research the potential of the property and get a mortgage plan.
Check if the home needs new fixtures or any repairs before you can start letting it out and find the right tenants with or without a letting agent. Make sure your finances are in place or you may end up with an expensive buy to let bridging loan. Always follow the advice of someone who has already been through the minefield!