Understanding UK Buy to Let Mortgages
Buy to let mortgages are something that most people have heard of but also something that very few people truly understand. This is true even for many people who have been in the letting business for a number of years, therefore meaning that they never have a full grasp of exactly what is going on with their mortgage. So what are the things to look for when trying to understand how buy to let mortgages work and, more importantly, how do you seek out the best buy to let mortgages UK lenders offer?
There are a few things to understand in relation to buy to let mortgages but you must also be aware that the essential idea behind them is that they function in much the same way as a regular mortgage. However, perhaps the main difference between the two is that a buy to let mortgage will typically offer higher rates than a regular mortgage, with the difference usually being around 0.5%. This, however, is not a problem to most people as they should have sufficient plans in place to make money from renting their property out to tenants.
Another way in which buy to let mortgages differ from regular mortgages is in the amount of equity you will need to initially have – i.e. the amount of money that you will be able to borrow. Whilst in regular mortgages the amount you can borrow is usually around 90% of the overall value, with buy to let mortgages this is usually closer to 75%, even with the best buy to let mortgages UK lenders can provide. As well as this, the fees will also usually be higher, coming in at up to 3.5% of the mortgage amount.
Although there are a few things that make buy to let mortgages more expensive than regular ones, this is more than balanced out by the fact that they offer great potential to generate an extra income stream or become an investment. Money is usually made in two different ways when it comes to buy to let mortgages – either through renting out the property to tenants or by allowing the value of the property to build up over time. There are risks though – not finding tenants can be costly and also house prices have been known to drop instead of rise. With the housing market looking uncertain at the moment, people should certainly see a buy to let mortgage as something that will make money through renting and not necessarily through the value of the home going up – unless they are planning a long term investment.
Perhaps the best way to ensure that you get the best deal on any buy to let mortgage is to use a broker, as they have all the experience needed in order to find you the best deals out there. There are a number of them who are experienced specifically in the buy to let market and they will be able to guide you through all of the hurdles that this process can have. In the end though you will have a property that you can make money from and yet another way to see yourself through the financial hardships that this country is currently in. After all, there has never been a time when more people are opting to rent their home instead of buying!