Most people are familiar with residential or personal mortgages, and many may have heard the term buy to let mortgages but are unaware of what this type of finance is actually used for. A simple definition might be a mortgage product that is designed to facilitate the purchase of a property which will primarily be used as a rental property, and will not be the primary residence of the purchaser.
Buy to let mortgages are a great way to build a portfolio of properties with a very moderate initial capital investment. One particularly attractive feature of many modern buy to let mortgages is the fact that the potential income from the property rent is allowed to be factored in to the repayment calculation. This means that even people with a moderate income, can often find that they are eligible for buy to let mortgages, this is especially true if the target property is in an area which displays a vibrant rental market.
For best results, it is recommended that you seek the aid of a professional mortgage broker, they will be able to search both the property market and the lending market to firstly find you the right property, in the right area at the right price, and secondly to find you a selection of the best buy to let mortgages for your particular situation.
Buy to let mortgages seldom cover more that 80% of the value of the property to be purchased, so you will need to find a hefty deposit, think of this as the only short term investment required, even at 80% buy to let mortgages allow you to acquire properties that otherwise would have been out of your reach.
Once your mortgage is in place and you have exchanged contracts on your property, you may wish to contact a property management agency, by combining strategic purchases with good value but to let mortgages and a competent property management agency, you will be on your way to building your own property empire. The management agency will carry out all the day to day tasks involved with renting your property. They will find tenants, they will collect the rents and they will keep you advised of any problems with your property such as maintenance that needs to be carried out.
Whilst on the subject of maintenance, it is important to seek properties that are in tip top shape in order to get the best from buy to let mortgages. Ideally the property you purchase should require no additional funding from on your part, apart from the initial deposit. A good plan is to buy one property and use the surplus rent to accrue the deposit for the next property. Any maintenance required during this process will slow down the acquisition of your next property. All in all, buy to let mortgages allow people to generate significant income and procure a string of properties, building residual wealth and accruing assets.