What is the Purpose of Buy to Let Mortgages?

Put simply, buy to let mortgages are a special type of mortgage that is geared towards a buyer who is intending to purchase a property and then make it available for rental. Buy to let mortgages have different terms to a conventional mortgage.

A significant difference between buy to let mortgages and a conventional mortgage is the fact that the mortgage lender will allow the borrower to incorporate the projected rental income as part of the overall income level for consideration when applying for the mortgage. Interest rates for buy to let mortgages are slightly above that of a normal mortgage, to offset the potential risk of a property sitting empty and the owner defaulting on the mortgage. Modern buy to let mortgages are attractively priced, and are no longer considered the specialist form of financing they once were.

Over the last ten years, buy to let mortgages have become increasingly popular, as they offer a particularly good way of accruing capital assets with minimal funds. Typically buy to let mortgages are available in terms of 5 to 45 years. Down payments can be as low as 20%, making buy to let mortgages a great way of investing money, even if you only have access to limited funds. Of course, any property you purchase in this fashion is liable to the same variation in value as any normally purchased property should the market slump.

In order for you to get the best from whichever of the buy to let mortgages you choose, you are advised to make sure that the property you are intending to buy will require as little maintenance as possible, and that you have plans in place to ensure the property is rented at all times. A great way to manage a property that has been purchased with one of the buy to let mortgages is to turn it over to a property management company, this effectively puts your property into fire and forget mode, you simply make the mortgage payments each month and the letting agency will handle the rest.

If you plan your investments, buy to let mortgages are a great way to accumulate capital wealth, quite often the monthly rent received will completely offset the mortgage repayments and completely cover the property management costs, there may even be a little left over as pure profit. If you consider that buy to let mortgages allow you to procure new properties with very little capital investment, it becomes clear to see why they have become so popular in recent years.

Buy to let mortgages are subtly different from traditional mortgages and it is advised that you seek the advice of a professional buy to let mortgage broker, they will be able to advise you which type of property are best purchased with buy to let mortgages, and how you can minimise the risk of your property becoming a problem instead of an asset.