All things considered, mortgage can be a rather overwhelming process if you don’t know how to properly tackle it. However, traditional mortgage is definitely much easier when compare to something like a Buy to Let mortgage. Compared to simply purchasing a property, the Buy to Let mortgage has to do with renting out the property that you purchase. It might be simple in theory but it’s a tricky venture – risky enough that lenders themselves often have a set of difficult criteria before you can apply for one.
Don’t let that dissuade you however, as there are still benefits to be gained from Buy to Let mortgages, enough that it is still widely considered to be a good investment. From the amount of rent you can earn and the possible rates of the property itself increasing over time, there’s a lot of money to be made. Here are some of the biggest questions with regards to Buy to Let mortgages, answered thoroughly to give you an easier time tackling this tricky mortgage.
Is it possible to have several Buy to Let mortgages?
Considering the fact that most landlords would think to expand their horizons by purchasing more properties and applying for more Buy to Let mortgages, this is a very common question. For this, it’s important to note that lenders are exceedingly cautious about Buy to Let in general – and multiple ones more so. You’ll find that most of these lenders would be willing at most to allow you three of these at a time for your properties.
Just be mindful that there are other lenders out there who have rules against going for Buy to Let mortgages from other lenders if you’ve already reached the maximum with theirs. It might be too much caution on their part, but it’s understandable considering the financial crisis of 2017.
How much exactly would I need to deposit?
Deposit is one of those aspects that can vary quite a bit depending on the lender. You have to remember however that compared to traditional mortgages, the amount that you would need to deposit is markedly higher no matter the situation. For example, the average would be about a 25% deposit when compared to the entirety of the purchase. This might seem like a lot, but the capacity to earn when it comes to renting properties is relatively high, so you’ll make the money back provided the property value is decent.
With regards to a property that was just built, that’s a different story. Some lenders won’t even touch these – because the risk is much too high. Still, if you find a lender that’s willing to go with a new build property, you’re looking at about a 10% addition so it would be around 35%.
Any tips before trying Buy to Let?
The first thing would be to look at the property you’re intending to rent out and see whether or not the property rates are likely rise (or fall) as time goes by. This is because it will directly affect the rent, as well as the price of the property when you finally sell. If the area you’re looking at has a tendency to decrease more often than increase its property value, it might not be a good idea.
To conclude, Buy to Let mortgages and renting properties are definitely not to be taken lightly. It’s a great investment with good returns, but you need to be well aware of what you’re getting into – or you’ll no doubt end up with losses. Make sure that you’re completely certain before giving it a go!