You might be looking to invest some funds you have and have decided to invest in property but where do you start? One of the most common options is renting a property out, buying it with the sole purpose of making an income from it. If so then you may be considering a but to let mortgage to help fund your new venture. This type of mortgage allows you to invest in a property and rent it out instead of living in it. A normal mortgage is not ideal for a buy to let situation.
Buy to let mortgages have become popular with investors nationwide and in Bournemouth. In general however they tend to be more expensive mortgages than normal ones. You might also be required to put down a bigger deposit too anything from 25% to 40% and maybe more.
There are also certain criteria you might need to meet to be eligible and these include:
• You are seeking to invest in houses or flats.
• You have an understanding of the risks in property investments
• You won your own home with – either outright or with an outstanding mortgage
• Your credit record is good
• You make £25,000+ a year. Anything less might cause challenges in getting approval from lenders to approve your BTL mortgage.
• Your age falls within lenders’ upper age limits (normally the oldest you can be when the mortgage ends has to be between 70 or 75) so you must be under a certain age when you take out the BTL
Lenders tend to be a little more stricter when it comes to buy to let mortgages and our Bournemouth based advisors can help you understand the process and what’s involved at all times.
How Does it Work?
In general the borrower will take out an interest only mortgage on the property they intend to rent out. They then pay interest each month on the loan amount. The full amount of the buy to let mortgage will be paid at the end of your agreed term with the lender you go with. Squared Commercial Finance can organise all this being buy to let mortgage advisors in Bournemouth.
A buy-to-let mortgage is a type mortgage for anyone who wants to buy a property to rent out, either a house or a flat, then rent the property. Buy-to-let mortgages usually as a rule of thumb need a larger deposit than normal mortgages and the interest rates are normally higher too.
Buy To Let Mortgages Bournemouth
With most buy-to-let mortgage schemes, you might still have the option for a capital repayment or an interest-only mortgage scheme, however, many investors choose interest only. This means that you’ll only pay off the interest of the loan at the end of each month, so won’t pay off the borrowed amount until the term ends.
New and existing landlords usually pick an interest-only mortgage, this is due to the fact it reduces your monthly payments a lot, allowing you to maximise your rental earnings potential. Landlords then tend to use their rental income to pay off the interest at the end of each month. However, you’ll need to remember the amount still you owe if you decide to sell the property and you need to pay this back.
Speak to the team here at Squared Commercial Finance and we can discuss all your buy to let mortgage advice in Bournemouth and nationwide.