BUY TO LET
The increase in house prices has created a demand for rental accommodation that has made the sector an attractive proposition for many people.
Mortgages have been made more affordable by low interest rates and the return on rental income can look attractive compared with return on some other investments. Added to that private landlords are afforded better legal protection than in the past.
Mortgages for buying to let are available to house owners who wish to enter the market and they are very similar to most mortgages but there will be other conditions involved.
The lender will offer a lower percentage of the value of the asset and very often insist on a minimum rental income in relation to the value of the property. They will also have specific requirements regarding the terms of the let and the length of let.
Mortgages for this purpose are not usually available from High Street lenders so one turns to the specialist lenders with competitive interest rates.
As the usual loan is about 75% or 80% of the value of the property, it may be necessary to take out a second mortgage on your existing property to serve as a deposit.
The size of the loan will be assessed by the lender and they will take into account the rent that will be earned and your personal income. The mortgage rate is likely to be slightly higher than the usual home loan.
Tax relief on mortgage repayments are obviously not available, but there are expenses that can be offset against interest payments, such as tax on rental income and agents fees and maintenance costs.
Provided you obtain the correct advice and assistance buying a property to rent can be quite straightforward and rewarding.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All loans and mortgages are secured on property. Think carefully before securing other debts against your home.
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