Buy To Let Mortgages have been solving landlord's funding requirements for the last 12 years. They are also known as investment mortgages. Buy To Let Mortgages are designed for borrowers who want to buy a property to let out to a third party (e.g. tenants). The amount that the buy to let landlord receives in rent may be over and above the mortgage payments and will help to offset the management and maintenance costs of the property. Over the past few years, more and more people have taken to investing in buy to let property as a long-term opportunity to make profitable returns, as well as a way of securing finance for their retirement plans.

There are a number of competitive buy to let mortgage deals on the market that are specifically aimed at the buy-to-let sector. These range from special offer buy to let mortgage deals to variable and fixed and rate options.

It is imperative to find the best buy-to-let mortgage rates as this may determine whether you can afford the buy-to-let investment. Here, The Mortgage Specialist can help Buy To Let investors.

UK mortgage lenders will often assess buy-to-let mortgages on the earning potential of the property (i.e. the rental income) together with affordability. 

Benefits Of Buy To Let:

• The attraction of having a property as great long-term investment – the long term capital growth in property is probable for a small island with 61 million and growing population. However, property prices can fall as well as rise as we have seen in recent times.
• Low interest rates - buy to let mortgages offer an attractive alternative investment
• There has been an increasing demand for rental accommodation due to a rise in the overall UK population, high divorce rate, and a growing number of higher education students
• Becoming a professional landlord can provide a good income

When buying a second 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 from the second property as it increases in value over time? The decision may affect the type of property you purchase, and the location.

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 135% of the rental property's interest only mortgage repayments in order to cover your costs should anything go wrong.

These additional costs include:

• Property upkeep - maintenance costs for the property.
• Letting agent's fees - letting agents charge around 10% of the monthly rent for finding and vetting tenants with an additional cost of around 5% if you require a full management service.
• Ground rent / service charges - applicable to leasehold properties.
• Legal insurance - to cover costs from evicting tenants in the event of non-payment, very important, as this can be very expensive.
• Insurance - building insurance and contents insurance for the items provided as part of the rental agreement.
• Furnishings - the purchase of any furniture. If the property is to be let furnished, make sure you are covered for this by your home insurance.
• Gas / electrical appliances - cost of maintaining appliances and ensuring they comply with any regulations such as safety tests.
• Decorating costs - the property may require work ranging from painting, to a new bathroom suite before it is suitable for letting to tenants.

When choosing a letting agent to act on your behalf it is very sensible to choose one that is a member of the ARLA. The reason being, all 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 looked at in order to maximise your tax position, such as being able to offset your maintenance costs, letting agent fees etc as well as any interest paid on a buy to let mortgage against your tax. Landlords should speak to a tax specialist about this, for example, an accountant.  Added to this, they should seek legal advice from a solicitors before purchasing a property to let.

What we would emphasise is that thevalue of property investments and income from property can go down as well as up and investors may not get back the amount originally invested.  The value of a property is generally a matter of opinion and the true value may not be recognised until the property is sold.  It may be difficult to sell or realise the value of the property in adverse market conditions.  Borrowers will still be responsible for maintaining the payment of any mortgage in the event that the property is not rented out and therefore may wish to make suitable provision for this event.

There will be a fee for arranging the mortgage. The precise amount will depend upon your circumstances, but we estimate it will be £395.

For further assistance, call us on 0800 612 7688.