In General Buy-to-let mortgages are not regulated by the Financial
Services Authority
Buy-to-let mortgages have been on offer
in the UK since the late nineties; they are specifically designed for investors
to borrow money to purchase property in the private rented sector in order to
let it out to tenants.
Facts of a buy to let mortgage for consumers
Lenders of buy to let mortgages
Interest rates on buy to let
Buy to let investment
Mortgage application
Buy to let explained
Lenders of buy to let mortgages
Lenders take different approaches. The amount of money investors can borrow is
determined by the rental valuation of the property. Usually the annual rental
income has to cover a certain percentage of the mortgage repayments, somewhere
between 120% and 150%. This is to allow surplus rent to cover other costs such
as property maintenance and void periods (periods when there are no tenants
living in the property and therefore no rental income). Other lenders will offer a three times' salary multiple and half the rental
income.
Others base the amount that they will lend on your salary and the existing loan
commitments that you have, but then apply the 'deduction rule'. This means that
they will lend up to 3.5 times your income (or whatever salary multiple
applies), minus a representative figure for annual mortgage payments worked out
at a pre-set level of interest. Say you earn £40,000 and have an outstanding
mortgage balance on your property of £120,000. Under the rule, the annual
mortgage repayments may be calculated as £10,000. This would be deducted from
your salary to leave £30,000, which is then multiplied by 3.5 to give £105,000 -
the amount that you are able to borrow.
Interest rates on buy to let
Typically the interest rates that are offered on
buy to let mortgages are fairly close
to residential mortgage rates but will on average be higher and typically charge
higher fees. This is due to the perception amongst banks and other lending
institutions that buy to let mortgages represent a greater risk than residential
owner-occupier mortgages.
Buy to let investment
This type of investment has become very popular in the UK over the last five
years or so, as house prices have dramatically increased. Another reason for
their popularity is the tax advantages that are available to UK Buy to let investors.
Rental income is considered in the same way as salary, and is therefore often
taxed at 22% or even 40%. However, landlords can deduct costs from the taxable
portion of their rental income, and these costs can include the interest portion
of their Buy To Let mortgage repayments as well as maintenance costs on the property.
This tax set-up has made Buy To Let investments more popular over the last few years.
Mortgage application
Apply
for a mortgage and get professional help in finding a
mortgage that you can trust. With many good companies around you should get the benefits
reserved for all good customers. If you want the best customer
mortgage service then here is the
place to browse.
A mortgage is far more complicated than a normal personal loan or car loan
motor loan. It is secured on your home and property. This means when
taking out a mortgage the bank or lender owns your house until the final payment
is made.
Buy to let explained
A buy to let mortgage is not the same as a personal loan. A
buy to let mortgage is
secured on your property, so you should be careful not to over stretch your self
because should you get into financial trouble you could end up losing your
property.
For a buy to let mortgage enquiry please contact
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