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UK Buy to Let Mortgages
Buy to let mortgages are designed for prospective landlords wanting a mortgage for the purpose of letting the property out to tenants.
When buying a property to let you will need to decide whether your primary objective is income or capital growth. In other words, are you looking to make a profit month on month or are you looking to make a profit through increased equity in the property as it increases in value over time. The decision may affect the type of property you purchase, and the location. For example, a prime city centre location may be more suited to high growth. When you manage a property there are many costs involved in addition to the monthly mortgage repayments. As a guide, you should be aiming to achieve a gross rent of about 130% of the rental property's mortgage repayments (interest only) in order to cover your costs. The additional costs include:
When choosing a letting agent to act on your behalf it is sensible to choose one that is a member of the ARLA. The reason is because members of the ARLA must join in a bonding scheme to protect rent and tenant's deposits. The bond provides total compensation of up to £2 million a year. There are a number of tax issues that need to be explored in order to maximise your tax position, such as being able to offset your maintenance costs, letting agent fees as well as any interest paid on a buy to let mortgage against your tax. You can visit the ARLA website at www.arla.co.uk for further information on becoming a private landlord. NEXT - commercial mortgages Mortgages explained | About mortgage types | repayment mortgage | endowment mortgage | interest only mortgages | how much can I borrow ? | mortgage payback rates | variable rate mortgages | fixed rate mortgages | capped rate mortgages | discounted rate loans | remortgages | first time buyers | buy to let mortgage | commercial mortgages | mortgage costs | glossary of terms | mortgage FAQ's | |
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