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Why a buy to let mortgage could work for you
Investing in property has become increasingly popular and today, 1 in 5 property purchases in the UK are bought for investment purposes. The reasons for investing differ from person-to-person, whether it’s for a second income, saving for retirement or to build a portfolio to generate a primary and steady income stream.
Funding a buy to let investment can be an overwhelming process to those who are new to property. For those who don’t have the option to purchase with cash, a buy to let mortgage can be another way to leap onto the buy to let ladder with around a 25-30% deposit.
Even for those in a cash position, a buy to let mortgage could be beneficial to you. Here are a few reasons why:
Mortgage conditions can be advantageous
When comparing a buy to let mortgage to a standard residential mortgage, there are a few significant differences that first time investors may not initially be aware of. Terms and conditions are often based on the property itself as oppose to the buyer. Here are some of the differences it might be worth knowing before considering your financial options:
- Whilst personal income will be considered during the lending process, most lenders will assess applications based on the rental property you’re looking to purchase
- Deposits are typically higher than a standard residential mortgage. Most buy to let mortgages require deposits of around a quarter of the property value.
- Unlike residential mortgages, age isn’t a major factor with buy to let mortgages.
- Buy to let mortgages are often interest only, rather than a repayment basis often found with residential mortgages.
These conditions are subject to change depending on the lender, but it’s worth bearing in mind what to expect while on your property search.
Interest rates are still low
Mortgage rates are still favourable which is great news for those looking to purchase or remortgage a buy to let property. They won’t stay low forever, so it’s important to assess your options before rates start to rise.
It’s all about timing
Now is a great time to consider a mortgage. Favourable property conditions and a strong performing mortgage market allows for the ideal borrowing situation. House prices are continuing to rise steadily across the UK and demand for property remains high, which makes for a healthy investment.
Leveraging can result in larger returns
One of the main benefits of a buy to let mortgage for investors is the ability to use a lump sum of cash and spread across it across several properties, as opposed to investing it all in one – this often results in a higher return on cash invested. It is typically a popular method for experienced landlords who want to offset their finances. Experienced landlords who use this method typically gain better capital growth from properties, as they get the benefit of capital growth across more than one property, as well as getting the rental returns. Those using mortgages can also then refinance their properties in order to expand their portfolios further.
If you’d like to find out more about buy to let mortgages and how they can be beneficial to you in your current situation, contact Expedite Finance today. Our team of mortgage experts can guide you through the borrowing process and offer help and advice. We can also help you find the best deal on the market to suit your needs, meaning a property purchase could be your best decision yet. To find out more, call us on 0800 2012 100.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The FCA does not regulate some forms of buy to let mortgages.
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