Buy To Let Mortgages have increased in popularity over recent years. The main reasons behind this are:
- The potential for excellent long term capital growth.
- An additional source of income for retirement.
- High demand for rental accommodation in the Nottinghamshire and surrounding areas due to an increasing UK population, increase in single occupancy homes due to a high divorce rate, and a growing number of students taking degrees.
- Having a property as an alternative investment to an existing investment portfolio.
- More lenders having entered the market leading to more competitive, specifically-designed, accessible buy to let mortgages.
Buy to let mortgages differ to ordinary residential mortgages in 3 main ways:
Rental – lenders will assess your buy to let mortgage based upon the rent you are likely to receive as well as your income. In some cases your income is not ever considered.
Interest Rate – Buy to let mortgages tend to have a slightly higher interest rate.
Larger Deposit – a buy to let mortgage will typically require a minimum deposit of 25% of the property’s value.
When purchasing a buy to let property you will need to decide whether your primary objective is income or capital growth. Your decision may affect the type of property you purchase, the location and whether you opt for a repayment or interest only mortgage.
Buy to Let Mortgages are not usually regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on your mortgage.