Everyone is encouraged to invest in something because most investments yield high returns. There are no better examples of this than property, primarily because of the high returns you can get from renting out. In a place like the UK, rental properties become more appealing in the long term for those that have money.
However, landlords should still take care of their properties when renting them out. For this reason, buy to let properties are particularly popular because they will help you get returns worth your money. Furthermore, mortgages for buying to let properties also exist, meaning that you can borrow money to earn more money in the long term.
Not many people are aware of buy-to-let properties, so we’ll discuss them in this article. Read on below to get started.
More about Buy to Let Properties
Buy to Let properties are properties that are bought to rent them out. Purchasing these properties means that you could earn more income in the long run than sticking to working for a job. This is why buying let properties make sense for those with some money to spare.
When you buy to let properties, you incur deferred costs over time. This means that the money you have left over can be invested into buy to let properties. This is the case because you are likely to earn even more money from buying and renting out properties than from working for a company.
How Buy to Let Mortgages Work
If you want to buy to let properties, you will probably need a buy to let mortgage. Mortgages for buy to let properties are very similar to ordinary mortgages. Only the lender will expect you to use the mortgages for buy to let properties in the long run.
For example, if you take out a mortgage to buy to let properties use that money to buy a property, you will have to rent out that property. Otherwise, you will be expected to pay off the mortgage cost and the other expenses that you incur. Therefore, you should be careful when applying for a mortgage to buy to let properties. Be sure to read up on the mortgage terms before you sign up for it to know what you’re getting into.
Paying for a Buy to Let Property
If you’re a landlord of a buy to let property, you must know the costs of paying for a buy to let property’s mortgage. These include:
Additional Costs
On top of the property’s purchase price, you should also know the additional costs associated with a buy to let property:
- An amount of £1,500 to £2,500 in lawyer and mortgage lender fees
- Stamp duty for properties purchased at £125,000 or higher. Depending on the value of the property, stamp duty rates differ.
- A consideration of funds for decorating the property. It’s worth noting that it’s not always required since you can choose not to have the work done.
- Payment for a gas safety inspection and an Energy Performance Certificate (EPC) preparation.
Finding a Buy-to-Let Mortgage
Finding and getting a buy-to-let mortgage is not easy because of the requirements. These include:
- The rent should be at least 125% of the mortgage payment.
- Borrow at most 60% to 75% of the property
- Be able to pay a deposit of at least 25%
Aside from these requirements, you will also be required to provide information relating to your income and credit rating. The lender will want to know how stable your income is and whether you can pay back the loan. The lender will also want to check your credit history to see how responsible you are for paying back debt.
Finding the Best Buy-to-Let Mortgage Deal
When looking for a buy-to-let mortgage deal, you should know that it can take a while before you find the right deal. There are many mortgages for buy to let properties, and they aren’t all made equal. Therefore, you should know how to narrow your choices down. You can find the best buy to let mortgage deals by:
- Looking for a mortgage that offers an interest-only period of between 3 years and 5 years.
- Looking for a lender that offers multi-year fixed rates.
When you have narrowed your choices down to a few options, you should compare their offers. Start by looking at their interest rates. By doing this, you can get a good idea of how much their rates differ and whether or not you should choose them.
Conclusion
If you’re looking for a way to make money, then you should consider investing in buy to let properties. The interest rates of buy to let mortgages are lower, meaning you could earn more money. Just remember to read up on the terms of the mortgage before you sign up for it so you can get an idea of what you’re getting into.
If you’re looking for buy-to-let mortgage providers, A Move Brokers has got you covered! Our professional lenders know the ins and outs of buy-to-let mortgages, so we can guarantee that we’ll help you get the best deal available. Simply go to our website to learn more!
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.
The value of your investment can go down as well as up and you may not get back the full amount you invested.