The Loans Network

Buy-to-let Mortgages

In the past five years the United Kingdom has seen a stable rise in property prices and with the fluctuation of share prices in the stock markets, property has become the safer alternative for investing your money. At present the most popular approach is in the area of buy-to-let properties. It has shown substantial growth, especially in new developments that are associated with one, two and three bedroom apartments near major cities. This investment opportunity can prove to be very lucrative with more than 275,000 properties in the UK with buy-to-let mortgages.

There have been two major effects to the buy-to-let sector due to the recent rise in house prices; the first being the reduced risk to the investor as the trend in house prices have shown a gradual rise; and the second being the large price rises on properties in general.

According to many market analysts those who choose to invest in properties through the buy-to-let means could find substantial returns on their investment if they decide to sell a few months or years after the initial purchase.

With the reduction of the affordable housing for first time buyers, thus increasing the number of potential tenants, they have had no option other than to pursue rented accommodation. This in turn has strengthened the position of landlords further as they can now be particular as to who they choose to rent their premises to, make significant increases to rent on renewal of the tenants contract, and to terminate the contract altogether if there are any breaches made during the tenants stay.

Buy-to-let properties generally need at least 20% of its financial value as a deposit, which you must have in reserve, with the mortgage lender providing the remaining 80% to purchase the property.

We recommend that you consult with a letting agent who is a member of The Association of Residential Letting Agents (ARLA). They are a professional and regulatory body for letting agents and ensure that all their members meet a set criterion and standard that is in the best interest for landlords and tenants. An ARLA member will be able to advise you on the properties that are popular in the area of your interest as well as providing recommended steps to guarantee that you get full rental potential for your buy to let property.

Our experts suggest that you view buy-to-let properties as a long-term investment, so it will pay in the long run to consider all avenues of possibilities. Such things could be the pursuit of a professional letting agent, investing in different insurance policies for the property and clarifying your financial and tax position are seen to be key issues. By doing thorough research and thinking through every scenario that may arise through this investment you can save yourself an immense amount of trouble and financial expense. There are always hidden costs in solicitor’s fees, maintenance and the furnishing of the property itself so be sure to account for these potential hiccups.

When securing a mortgage for your buy-to-let property, choosing the right repayment period is vital for the success of your investment. This range from five to forty-five year terms and our experts strongly advise that the mortgage repayments are lower than the rental income by at least 30% if you are to make this venture profitable.

In summary, these are the main advantages for buying properties with a buy-to-let mortgage:

• They are affordable due to interest rates being low.

• Property is a sound long-term investment as the stock markets can prove to be very volatile with your share interests.

• There is great demand for rental accommodation due to the overall UK population rising, growing student numbers and a high divorce rate.

• With competitive, specifically designed buy-to-let packages, mortgage lenders are making life that little easier for the landlord.