Trying to become a in the UK? You’re not alone. A lot of people are realizing that investing in real estate is definitely a good idea. The more that they can invest, the more wealth that they’re going to accumulate over time. However, there are problems. For starters, you’re going to need to think about actually maintaining a good system for not only acquiring homes, but actually taking care of them. If you’re thinking about buying a property to let out, you’re going to need to make sure that you have the inside angle.
So, let’s start from the top, shall we? What is a buy to let mortgage, anyway? Even though you might not have thought to ask, this is actually one of the top ways that people think about getting their first investment property. They can use it for purely residential purposes, but most people are going to be thinking about renting to someone that they don’t know in hopes of getting good rental income. You’re hoping that the rental income that you pull in is a lot more than the mortgage underneath the home.
In the buy to let mortgage arrangement, the investor (you!) is going to borrow money (from the lender) to purchase property for the specific purpose of letting it out to tenants.
The lender is going to calculate how much they are actually willing to lend you using a different formula than if you were going to live in the property itself.
Keep in mind that interest rates and fees that are assigned to buy to let mortgages are going to be a little bit higher than if you were occupying the home yourself. The lenders will assume that there’s going to be a greater risk than if you were in the property yourself.
The recent credit crunch is making some people feel a bit skittish on BTL mortgages, but there are still opportunities for people that have solid income and employment history. If you can prove to the lender that you’re old enough to handle the mortgage and that the money will continue to flow in, you will be able to get the mortgage that you seek.
One of the biggest reasons why people like buy to let mortgages is because you get to handle rental income from the home as salary. Yet while employees cannot deduct many fees and costs from their salary, you have the upper hand as a landlord. As the landlord, you can deduct costs from the taxable portion of your rental income. Qualifying costs would include the interest portion of the mortgage repayments as well as maintenance costs on the property. Keep in mind that at the start of the mortgage you’re going to have a lot of interest to pay, so don’t think that these tax incentives are for show — they can really pay off!
Are you ready for a BTL mortgage? If you’ve done your research on the property and it’s in a desirable area, you might be surprised at just how profitable that mortgage can be in the long term!