Tuesday, March 24th, 2015
A buy-to-let mortgage is a loan for the intended purpose of purchasing a property which you will then let out. The main difference between buy to let mortgages and residential owner-occupier mortgages is that the amount mortgage providers are willing to lend is also dependent on the expected rental income from the property in question.
Given that there are now many more buy to let mortgage products available, even experienced landlords have a hard time keeping up to date with developments in the mortgage markets and knowing which one best meets their needs.
As with any other investment, when making a decision as to which buy to let mortgage product may best suit your requirements, it is our contention that you should always seek out professional advice from a specialist mortgage broker that will be able to offer advice on a variety of buy to let products from a wide range of lenders, many of which may well only be available through such brokers and are not available direct to the general public.
Ok, so you’ve decided that a buy to let mortgage might be for right for you, but what about the amount that can be borrowed? Well, most buy to let investors purchase a property using a combination of their own money, which is then used as the deposit, with the balance of the money then borrowed via a mortgage.
So to be able to calculate how much money you can comfortably borrow, it is important to take into consideration the potential rental income you are expected to receive from your proposed buy to let property, the amount of deposit you will have available and of course your individual circumstances.
Armed with that information, and with the accent on affordability, an experienced and suitably qualified mortgage adviser will then be able to provide you with detailed guidance as to what the borrowing options are as regards your proposed buy to let mortgage.
Other things for you to consider are the mortgage repayment type and of course any fees that might be applied throughout the process.
A repayment mortgage reduces the amount you owe each month as your monthly repayments consist of repaying the capital along with the interest accrued. With an interest only mortgage, your monthly payments consist only of the interest charges; you do not repay any of the capital borrowed through your monthly payments.
Turning to fees and charges, when arranging a buy to let mortgage you must also give consideration to the fees and charges that may also be associated with arranging the loan itself:
Typically these fees and charges will be broken down as follows:
Valuation fee – is the amount charged to carry out a valuation of the property on behalf of the lender
Booking fee or arrangement fee – these are related fees charged by the mortgage lender in connection to the buy to let mortgage
Legal fees – are payable to the solicitor acting on your behalf
Broker fee – Some brokers are paid commission by the lender for selling their products, others will charge a fee, and some will cover their costs by a combination of both.
So, with all that to think about, if you would like some help with organising your buy to let mortgage, then call Caboodle Finance of Sutton Coldfield, Birmingham today on 0800 151 2407 (mobiles maybe cheaper on 0121 308 9114) or just complete the “Request A Call Back” form above to see how we can help you select the right product for you.
Caboodle Financial Services Ltd
240B Lichfield Road
Sutton Coldfield B74 2UD
Telephone: 0121 308 9114