Buy to let mortgages allow you to purchase a property that you will rent out to other people. Although the process of applying for a buy to let mortgage is quite similar to applying for any home loan, there are certain factors you should consider when selecting the best one for you.
Location, location, location
Your ability to repay your buy to let mortgage is usually assessed by a bank or lender, based on the rental market in the area you buy. If they believe your purchase is risky or that you may have difficulty in finding tenants, they may decline your application. For this reason, it’s wise to do plenty of research on the area you wish to purchase a buy to let property.
A sufficient buy to let mortgage deposit
Although the success of each mortgage application depends on your individual circumstances, there is often a requirement for a substantial buy to let mortgage deposit. The amount you must pay in deposit varies depending on the lender and the amount you would like to borrow. But the more money you can put down initially to buy the property, the less of a risk you will be to any lender.
Do the numbers
Buying a rental property is a bit like running a business. You need to consider all the costs involved, not only when you are purchasing the property but running it as well. It’s important to consider how you will fund your buy to let mortgage deposit, pay solicitors or surveyor fees for example. And once you have tenants in the property, will the rent payments cover your mortgage repayments, tax liabilities, insurance, service charges or grounds rent and general maintenance? It’s also wise to set money aside for ad hoc repairs. In most cases, this information will be required by a lender, which is why it’s important to gather all the necessary facts and figures before you apply. If you have carried out thorough research into the finances of your buy to let mortgage, you will have a better chance of securing the best buy to let mortgage for your property and purchase.