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I want to buy or re-mortgage an investment property (buy-to-let)
What You Need to Know about Buying an Investment Property (Buy-To-Let) Mortgage
The purchase of a property as an investment has been increasingly popular in recent years. Investors look for a return on capital growth and/or a profit from the rental income.
The purpose of a Buy-To-Let mortgage is to allow an investor to raise finance in order to purchase (or re-mortgage) a property which is not occupied by the borrower.
Lenders normally base their Lending decision upon the rental yield as compared to the mortgage repayments. Lenders will assess whether the property is likely to be rented out consistently and the anticipated rental income.
The amount they are prepared to lend varies between Lenders.
Typically Lenders will require the rental income to be about 125% of the monthly mortgage payments and will lend only 85% of the property value, although some will lend more. Some Lenders will take into account the applicants‚ other income.
Currently these types of mortgage are not regulated by the Financial Services Authority. However as we are regulated by the Financial Services Authority we treat these transactions as if they were indeed a regulated product‚ and thus adhere to the standards required of regulated products.
Before acquiring a property with the intention of letting it, it is wise to consider and research the following:
- which property types and their locations are currently in demand from prospective tenants;
- whether the demand is likely to be short-lived or more permanent, and items such as local amenities and transport links are important;
- whether the tenant type you are looking for will look after the property or not, and what repair costs are likely;
- whether you intend to use a letting agent or not‚ and the costs of doing so - to assist in finding tenants and managing the tenancy and your landlord responsibilities
You can find out more about typical mortgage related costs here