SimplyFinance - Buy to Let

Current Status of the Buy to Let Mortgage Market

2007-10-08T07:00:00Z

According to numerous sources there has been a downturn in the number of people buying investment properties in the UK. The Council for Mortgage Lenders (CML) agrees and warns that the demand for buy to let borrowing is expected to ease.

One specific example of this easement can be seen when taking a look at Landlord Mortgages. They say that there has been a 25% decrease in the amount of business being carried out by their current clientele.

More bad news for the buy to let market came this week when the Institute of Directors petitioned the government to close a tax loophole that allows investors to deduct interest costs from their rental income. CML says that while the number of outstanding loans is at a record high of 938,500, the actual number of loans that were taken out in the first half of this year is down 3 percent from the second half of 2006.

Since it is becoming more expensive for lenders to borrow money to the wholesale market, there seems to be a growing trend in the way that lenders are marketing themselves. Instead of trying to compete with low fees and high LTVs, many top lenders are attempting to make themselves look as unattractive as possible with high fees, lower LTVs, and with fewer product offerings. Since they're unable to pull out of the market completely, this is the best course of action for them.

The whole appeal of buy to let mortgages for landlords is that the value of their property is supposed to appreciate. However, the way the market is behaving currently, it isn't certain that property values will appreciate. Most buy to let borrowers realise that property value appreciation is a long term goal and that it's something that will happen over numerous market cycles. Because most buy to let borrowers are aware of this, the market specialists do not expect this short term downturn in the market to affect the investment property industry or buy to let mortgages too much.

Due to the instability of the current housing market, there is sure to be a steady increase in demand for rentals. This will keep buy to let mortgagers afloat. Research shows that there is a 2.4 percent increase in the demand for rentals. Also, it shows that rental yields are holding steady at around 6%. Many landlords plan to increase their portfolios in the near future bringing the average portfolio's worth to around £1.5 million by the summer of 2008.

According to the Association of Residential Letting Agents (Arla), 28 percent of landlords plan to sell some of their holdings, while 10 percent say that they will sell their holdings completely. Considering these numbers, one can see that the majority of landlords plan to stick it out for the long term, and that is why it is believed that the buy to let market will stay afloat.

If you're interested in a buy to let mortgage, take a moment to fill out a short from, and one of the SimplyFinance representatives will contact you soon to introduce you to a buy to let mortgage broker that will help you find the best possible buy to let mortgage deal for you.

Buy to Let Mortgage Basics

2007-08-08T23:00:00Z

Buy to let mortgages are widely popular in the UK housing market. Ten percent of all mortgages taken out in 2006 were to buy property in order to rent it out privately to tenants. This type of mortgage can be a sound investment if you have done your research. There are specific mortgages for buy to let mortgages, and if you are an investor you will want to have the knowledge on hand before discussing a buy to let mortgage with a lender.

The goal of this article is to explain the buy to let mortgage basics, and it will also cover why buy to let mortgages are so popular, the different types of mortgages specific for buy to let investors, how much you can borrow, how much is required for a down payment, and where you can find a buy to let mortgage.

Why Buy to Let Mortgages are Popular

In the UK, buy to let mortgages are increasingly common for several reasons. Comparatively, it is a good investment. The stock market fluctuates and it can be incredibly risky. However, with the population growth, steadily high divorce rates, and an increasing number of college students, there is plenty of demand for rental properties. With good to excellent credit, you can find low interest rates on buy to let mortgages. Buy to let mortgages are competitive and specifically designed for landlords. By obtaining an interest only mortgage, buy to let owners are able to make smaller payment initially. This is a great option for people who are looking for long-term investments. Over time, property values can increase and your investment can pay for itself.

Types of Buy to Let Mortgages

Historically, buy to let mortgages required variable interest rates. Fluctuations in the market could raise or lower monthly payments. Most investors appreciate knowing how much their mortgage payment is every month because it affects how much the landlord should charge per rental. Luckily, variable interest rates are in the past, and nowadays, you can find buy to let mortgages with fixed rates, flexible rates, and interest only. By understanding buy to let mortgage basics, an investor can determine which type of mortgage best fits their property investment plan.

What is an Interest Only Mortgage?

Fixed and variable rates can be paired with an interest only mortgage. This means that buy to let investors can simply pay off the interest owed to lender. Once the property is sold, the remaining capital will be repaid. Interest only mortgages allow for lower payments while the investor makes money off of the appreciation of the property.

How Much Can I Borrow?

Buy to let mortgage basics will allow you to formulate how much you can borrow. Typically a property investor will need a down payment of approximately 15%, so the bigger deposit you have increases the amount of money you can borrow. Lenders also usually insist that the rental price covers anywhere from 125% -100% of your buy to let mortgage payment. The reason why lenders take into account rental prices is to protect you and themselves when the property is not being rented out.

Considerations

There are professional landlords or investors that own several or even hundreds of properties, and there are amateur landlords that only own one or two pieces of property. Regardless of which category you fall into, the basic principles are the same. Landlords need to know what their legal responsibilities are, and how their property investment affects their tax position. These responsibilities are critical, and as a landlord, you are legally bound to accept these responsibilities when renting out properties.

Where can I get a Buy to Let Mortgage?

Since there is a growing trend of investors obtaining buy to let mortgages in the UK, there are many mortgage brokers that can offer you a mortgage to fit your specific needs. You can even search online through hundreds of buy to let mortgage quotes.

If you don't have the time or patience to search through hundreds of online quotes, let SimplyFinance do it for you. We'll introduce you to a mortgage broker that will answer all of your buy to let mortgage questions before they search through hundreds of buy to let mortgage offers to find the best one for you.

CLICK HERE TO APPLY FOR BUY TO LET MORTGAGE TODAY!

How to Find a Buy to Let Mortgage

2007-08-08T23:00:00Z

If you are shopping for a buy to let mortgage, you are not alone! Buy to Let Mortgages are widely popular in the UK housing market. Approximately 10% of all mortgages taken out in 2006 were to buy property to rent out. With a growing population, steady divorce rates, and a large population of students, there is constant demand for rentals. If you have done your research, buy to let mortgages can be a sound investment. There are specific mortgage types for buy to let mortgages, and if you are an investor you will want to have the knowledge on hand before discussing a quote with a lender.

The purpose of this article is to increase you knowledge about shopping for a buy to let mortgage. We will go over the basics of buy to let mortgages, deposit requirements, and where to find a buy to let mortgage lender.

Are there good deals to be found?

Yes. Because buy to let mortgages are increasingly common, lenders offer competitive mortgages specially designed for landlords.

Types of Buy to Let Mortgages

Historically, the only type of buy to let mortgages required variable interest rates. Fluctuations in the market could rise or lower monthly payments. Most property owners appreciate knowing how much their mortgage payment is every month because it affects how much the landlord should charge per rental. Variable interest rate mortgages can provide a teaser APR initially and then depending upon the market, it can rise and fall. It is a gamble, but you might be able to pay less than a higher fixed rate. Luckily variable rates are in the past, and nowadays, you can find buy to let mortgages with fixed rates, flexible rates, and interest only payment plans. By understanding buy to let mortgage basics, an investor can determine which one fits their property investment plan.

If you are shopping for a buy to let mortgage, the interest rate and type of mortgage is instrumental in calculating the overall cost of your loan. The difference between a fixed rate and variable one could be thousands of pounds, so do you homework and make a sound decision about which type is a better investment for you.

What is an Interest Only Mortgage?

An interest only mortgage can be paired with either fixed or variable rate just like a regular buy to let mortgage. You will simply pay off the interest owed to the lender and not the principle that you borrowed. Once the property is sold, the remaining capital will be repaid. If you are shopping for a buy to let mortgage, interest only mortgages allow for lower payments while the investor makes money off of the appreciation of the property.

How Much Can I Borrow?

Buy to let mortgage basics will allow you to formulate how much you can borrow. Typically a property investor must have a down payment of approximately 15%, so the bigger deposit you have increases the amount of money you can borrow. Lenders also usually insist that the rental price covers anywhere from 125% -100% of your buy to let mortgage payment. The reason why lenders take into account rental prices is to protect you and the lender when the property is not being rented out.

Considerations

When you are shopping for a buy to let mortgage, it is important that you understand the legal responsibilities associated with being a landlord. Whether you are a professional landlord that owns several or even hundreds of properties, or an amateur, the basic principles are the same. It is your responsibility to know what is required of you and how your investment affects your taxes. Take all of these points into consideration when shopping for a buy to let property.

Where can I get a Buy to Let Mortgage?

Since there is a growing trend of buy to let mortgages in the UK, there are many mortgage brokers that can offer you a mortgage to fit your specific needs. You can even search online through hundreds of buy to let mortgage quotes. If you don't have the time or patience to search through hundreds of online quotes, let SimplyFinance do it for you. We'll introduce you to a mortgage broker that will answer all of your buy to let mortgage questions before they search through hundreds of buy to let mortgage offers to find the best one for you.

CLICK HERE TO APPLY FOR A BUY TO LET MORTGAGE TODAY!