Buy to Let Mortgages in Warrington
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Buy to Let mortgages are a popular way of investing and generating a source of income. It is important to know all the information you can before taking out a Buy to Let mortgage and understand the processes and risks involved. Some frequently asked questions are who can get one, how much one can borrow, and whether to do it or not; below is a short guide outlining the need to know of Buy to Let.
Who can get a Buy to Let Mortgage?
If you are looking to invest in property – then a Buy to Let mortgage could be the option for you. You need to make sure that you can afford to make this financial risk and understand the issues that can arise alongside investing in property.
You need to have a good credit record and make sure you are earning at least £25,000+ annually; lenders look for this income due to the financial risks that can be involved. There may be specialist lenders out there who will lend to you with a bad credit rating or less than the threshold annual salary however they are untypical and hard to find.
Typically you must own your own residential property before being let on to a Buy to Let mortgage term. You need to take into account the different fixed rates and variable rates involved with Buy to Let (BTL) mortgages and location when looking for property to rent.
How do Buy to Let Mortgages work?
Usually, when it comes to Buy to Let mortgages you need at least 25% of the property’s value gathered as a deposit. The interest rates in comparison to residential mortgages are typically higher. Most Buy to Let products and lending are not regulated and authorised by the Financial Conduct Authority (FCA).
Most Buy to Let mortgages come with the interest-only repayment option – this means that the original mortgage amount will be payable at the end of the term. The payments you make each month will not count towards the loan amount and it is important to keep this in mind.
Rental income ideally needs to be 25% over the amount of mortgage repayments, so it will need to cover the mortgage payment and more. Lenders will look into the area for a guideline of how properties are faring on the market and assess you accordingly.
If you are confused about Buy to Let mortgages or want advice that is regulated and authorised by the FCA then get in touch with a Mortgage Broker today. There are a lot of different mortgage deals out there and lenders too so we know how daunting it can seem.
How much can you borrow on a Buy to Let Mortgage?
The amount that you can borrow is dependent on the amount of rental income you are estimated to receive on the property you are letting out. There are guidelines to follow and assessments to ensure everything is legitimate.
Rental payments will vary between locations and it is best to get in touch with a Mortgage Broker if you are thinking of investing in property. Getting in touch with a local Mortgage Advisor will allow you to find out about the property market in the area you are interested in and what is best for you long term.
You could use an online mortgage calculator in order to see an estimate of how much you may be able to borrow before you buy a property or invest in a Buy to Let mortgage.
Advantages and Disadvantages of Buy to Let Mortgages
It is no secret that the property market fluctuates and is ever-changing so you might be wondering if it is worth investing in, this is an answer only you can find but we can explore some advantages and disadvantages.
- Property prices generally tend to rise over the years so investing in property can be profitable in the long term
- The rental market is not going anywhere
- Increased stamp duty
- Payments went the property is empty
- The fees and process in obtaining a Buy to Let mortgage can be lengthy.
You need to make sure you do not rely on selling the rental property as a way to be able to pay off the mortgage at the end of the term. If you do not make the repayments on your mortgage your home may be repossessed, and it would cause damage to your credit score.
How can a Mortgage Broker help?
A Mortgage Broker can listen to your certain financial situation and the ideas you have when it comes to investing, As mentioned before, there are a lot of Buy to Let mortgage products that are not regulated and authorised by the financial conduct authority, so it is important to ensure everything is legitimate.
Using a local Mortgage Broker comes with the advantage of the broker knowing the mortgage market in the area you are looking to invest in. They can advise on locations and connections and advise on Buy to Let mortgages.
Every lender is different and will have different criteria to fit but our experts have a range of experience with a range of different clients. We will be upfront and honest when it comes to our mortgage advice and let you know the risks involved in investing too.
We can help you gather all the documentation that you will need and ensure you are following the process of investing properly. Mortgage Advisers who have access to the independent mortgage market allows them to reach different mortgage products with more options when it comes to rates and criteria.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Not all Buy to Lets are regulated by the financial conduct authority.
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