Buying a property purely for the purpose of letting it is a popular choice for investors who wish to see their apartment or house gain in value over a period of time, while earning an income from rent that covers the mortgage repayments.
Some potential investors are discouraged from purchasing buy to let property because they mistakenly believe the mortgage will be expensive. In fact, many mortgage lenders offer deals that are not only competitive, but also on a par with conventional mortgages.
Mortgages on buy to let properties do differ in some ways, although landlords retain the choice between repayment and interest only deals. When assessing the financial circumstances of an application, the lender will give consideration to the projected rental income from the property, rather than the landlord’s income; the rental income will need to be more than the monthly mortgage repayment, typically 125%. Anyone considering becoming a landlord will need to consider this when working out their budget, especially as rental income may be liable to fluctuate according to whether the property is occupied or not.
The most important step you can take if you are planning to purchase property for the buy to let market is to obtain professional independent advice from Rated Financial Advisers so that you can weigh up all your options in an informed manner, before making any long-term financial decisions.