Buy to Let Best Mortgages Can Be Obtained, But What Are The Problems?
May 2009, buy to let mortgage offers had dropped by more than 90% when compared against the previous years. Finance was regularly seen to cover only 65% of the costs, though that is now returning to the 75% mark., for example buy to let mortgage offers from the Halifax building society, though you will need a minimum of £25k income.
The difference will be made up from your own pocket if you are short of the purchase price of the property, and where will you make up the difference?
It’s tempting to increase the rent for your tenants, but be careful if you do not to increase too far. Many landlords look to make an annual profit on their investment, which is not unreasonable! However in these days when money is tight for many, how far should you push your rent? Put another way, you might have been successful in getting the best mortgage for you buy to let, but what problems could you run into?
When looking through the options of buy to let best mortgages, and balancing the income against purchase price, you have two major danger factors to consider:
1. The type of mortgage you take out and the amount borrowed should be considered not as the current financial situation now, but the darkest predictions of the future. If you chose a tracker and the base rate increased, you could be stuck with a mortgage that you cannot pay from the tenancy agreed rent that you propose.
2. You could price yourself out of the market! Even an extra 25 GBP a month could put you just over the marketability of your property. If your property stands vacant for even a few months you will still have to foot a (potentially hefty) bill, with no income.
How should you look at these problems? Simple, don’t be too eager to make a fast buck!
1. Remember you are providing a service. Your clients could be renting because they have lost their own jobs, or be unable to find the deposit for their own mortgage. Concentrate on getting people into your property and meeting the rental costs.
2. Make sure that the buy to let best mortgage that you can find is affordable even if there are unexpected rises interest rates or upkeep of your properties.
3. It is perhaps better to consider that your purchase is a long term investment. Increase the spec of the house, though not above that which can be shouldered by the location. You will want to make your property the most attractive in an area of similar properties – perhaps with a more favourable paint job, cleaner carpets, immaculate bathroom and kitchen. Then you will be able to fill your property when other buy to lets stand empty.
Consider your positive or negative cash flow. You don’t want to make a loss, so don’t cut off your nose despite your face! But do settle for acceptable rather than huge profits. If this is your first buy to let mortgage and you already have an income elsewhere, best not throw in the towel on your current job yet!
Rentable value. how much rent you might be expected to raise on a buy to let remortgage will depend on the amount required to buy the property, for any work to put it in a good position in the market, and any planned for future maintenance. Depending on these variables and other buy to let considerations, you will make either more or less profit, but don’t obsess about it. Keep looking for those buy to let best mortgages - there are plenty of deals still to be had.
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