Today's Buy to Let Mortgage Providers...
Many people are now turning to property as a means of providing funding
for their retirements and hundreds of people are becoming landlords for
the first time every day. So what has fuelled this buy to let mortgage uk
phenomenon Well for one thing equity markets have performed poorly over
the last few years and many people have lost faith in pension plans as a
means of providing for their futures. Pensions are not viewed as being as
tax efficient and they wear and there of being plenty of horror stories
regarding company pension plans to cause sufficient worry amongst
individuals. These factors coupled with the fact that demand for rental
property is at an all time high have created a need for this products
existence
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Property is a great longer-term investment, especially as stock
markets are volatile.
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Interest rates are low, so buy to let mortgage uk offers an
attractive alternative investment.
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With the overall UK population rising, a high divorce rate plus
growing student numbers, there is plenty of demand for rental
accommodation.
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Mortgage lenders are offering competitive, specifically-designed,
accessible landlord mortgages to make life easy for the landlord.
As well as the rental income which can be used to help pay the monthly
mortgage repayments, a landlord is able to benefit from any capital
appreciation in the home over the period of ownership. To a certain
extent, this sector of the market coupled with the limited amount of
property available, is helping to keep house prices buoyant at the moment.
If you buy property to rent, you will find that it is reasonably easy
to borrow money from a lender to finance the purchase. Many people are
releasing equity from their own homes to come up with the deposits. Until
recently, investment mortgages were practically non existent and any form
of lending was seen as a commercial proposition and the interest rate
required was usually several points above what you would expect to pay on
a domestic mortgage.
This type of funding is now very common and a let to buy mortgage is
similar to one you can obtain for your own home, lenders will now consider
any rental income from the property as well as the income of the proposer
when calculating their acceptance criteria.
There are a variety of contracts on the market and now most lenders
will have at least one or two deals in their portfolio. Interest rates for
this type of lending are a little higher as the commercial element of the
risk is factored in to the equation. Although 90% and above loan to
valuation lending is fairly common for homeowners, buy to let mortgage uk
providers are a little more strict, you may find that the maximum you can
borrow is 85% of the purchase price, so you will have to find a little
more for the deposit.
Unlike standard mortgage lending, one thing you will notice that is
different is that it is doubtful if the lender will be able to offer you
landlord building and contents insurance. It will still be a condition of
the loan that you obtain this type of insurance and cover must be in line
with that laid down in the Council of Mortgage lenders hand book . Whilst
they may be prepared to lend you the money, few lenders want the risk of
insuring the property proffering of course to leave this aspect of the
deal to a specialist company. No need to worry though, as residential mortgages have become popular, landlord insurance which was once seen as a
niche insurance product is now available from any number of sources and
there are at least 30 companies on the Internet that will be able to
provide you with a quotation.
One of the problems frequently encountered with the release of mortgage
funds, is the ability to produce a schedule of insurance noting the
lenders interest, many borrowers ( or there solicitors) often leave the
insurance arrangements to the last minute and this can often lead to
unwelcome delays.
