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. Sometimes a buy to let bridging loan will be necessary if the mortgage cannot be obtained quick enough or you are in the process of selling a house.
With this type of mortgage you would typically pay mortgage interest only and can be used for up to 85% of the estimated value of a property. 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.
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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.
A buy to let bridging loan can turn out to be very expensive if you do not pay it off quickly. Before you go ahead and commit yourself to such a loan make sure you can answer whether you really need this property and is it worth it and can you pay it off quickly. Like all products and services they are there for a purpose. Just make sure one suits your true needs.
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 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 don't know your area you might end up with a 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.
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