Buy To Let Mortgage: Key To Benefiting From Rental Market
For the past few months, there has been an increase in people flocking to the rental market. The move to rental properties has been advantageous for some landlords who now have the opportunity to increase rents. The higher rents, coupled with decreasing house prices in some areas has led to heightened gross yields, otherwise known as the percentage of the property’s value that is generated in rental income every year. With demand and yields both on the ascent, and the sales market appearing somewhat on shaky ground, landlords have been gradually going back to the market or opting not to sell.
The increase in rents is undeniably a contributing factor to the landlords’ decision to hang about. Meanwhile, letting agents are now more hopeful about the prospect of rental growth than they were a few months ago. According to some experts, buy to let investments are getting more and more popular as investors discover the potential to purchase properties well below market value from distressed sellers. Additionally, a growing number of people are also resorting to letting for a couple of reasons. First, they feel safer, and second, they simply cannot get a mortgage. Other experts add that the lettings market goes on being buoyant, with demand doing better than supply, specifically for well presented properties in good locations.
Even though the market is somewhat unpredictable at the moment, the buy to let industry is expected to continue thriving. Industry professionals say that the rental situation is such that quality properties are continuing to let. There is a particular demand from young couples and single individuals who do not have enough funds to buy a house. Plus, those in the buy to let field may be happy to find that one bedroom flats are particularly in high demand.
Such optimistic information may spur you into entering the letting industry via a buy to let mortgage. Buy to let mortgages are those that are particularly designed for people who plan on investing in the property market by buying one or more properties and letting them out. The owner is then able to reap profits from any appreciation in the property’s capital value. It is also possible for the owner to maintain the house and meet the greater amount of the loan repayment through the income provided by letting.
The difference of buy to let mortgages now from what came before is that the current model allows the revenue from the rents to be recognized as income during the period when the buyer’s ability to meet the monthly mortgage payments is being assessed. It is likely that the percentage which the buy to let mortgage provider is willing to loan will be limited to a maximum of 85 per cent of the property’s value. The term is most likely to be around 5 to 30 years. Interest rates are to some extent higher compared to that of a standard mortgage agreement.
Before buying, be sure to be knowledgeable about the area in which you are interested in. Seek the help of a letting agent who is familiar with the area. By planning thoroughly and buying wisely, you will be able to acquire a property that will not only require minimal maintenance, but is also appealing to high quality tenants.
Parmdeep Vadesha is a property investment expert and founder of the largest community of property entrepreneurs on the web who buy below market value properties from distressed homeowners facing repossession, divorce and bankruptcy. He writes a monthly newsletter for over 70,000 property investors worldwide - www.Property-System.com
Click the XML Icon Above to Receive Investing Articles Via RSS!
