Buy To Let Mortgages: Different From Residential Mortgages

Residential mortgages are offered to home buyers and buy to let mortgages are offered to those who want to invest in property to let it. These people see this type of investment as a main source for rental income and can assume that the rental will take care of the monthly mortgage payment and hopefully the landlord is left with an asset which he can sell to obtain a profit. As the real estate market has, historically, been a safe bet for investment, this strategy of has paid off well for many buy to let investors. However, with changing times, the same proposition has lost its charm and the number of takers are slowly on the rise once again.

There are actually a number of ways in which buy to let mortgages differ from residential mortgages. Firstly they can differ by the amount of deposit that is required to secure the mortgage. The mortgage providers can ask for a higher deposit amount for a buy to let property than for a residential property. The mortgage lenders are very interested in knowing about the rental income as well as other sources of income received. They are not affected by the profits you may make in the long run. Also, the lenders generally only offer the mortgage if they think that the rental income is 125% of the monthly repayment.

It is, therefore, always a good plan to consider using of the services of a buy to let mortgage broker who will be able to provide you with ample information regarding the buy to let market and throw some light on special deals. There are a few things you need to keep in mind when you are shopping for a buy to let property. When you know what your rental income is most likely to be, you will get an idea of the amount that would go towards the mortgage payment. You may also want some of the rental income to accumulate so that you can cater for maintenance to the property without you actually having to dip into your own pocket.

Find out the amount that has to be deposited before the mortgage is actually successfully sanctioned. Also, it is very important to identify the time period, if any, for this type of investment…whether you are going to own it for a long period or short period. Like any kind of an investment, long term holding would definitely achieve greater benefits than short term investments. Last but not the least; do not forget to read through the fine print!