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Just about anyone can be a property investor now. Property has become a great deal more affordable since the introduction of financial products such as buy-to-let mortgages and the wide availability of lenders willing to arrange remortgaging of first properties. Ask your peers, colleagues or friends – no doubt at least some of them own a second property that they let out for profit. Some people have ended up in the property investment ladder as a result of circumstance – for example, they may have moved in with a partner and decided to keep their old property rather than sell it. Others seek out potential buy-to-let properties specifically for the purpose of letting them out to top up their income – or even as a full-time earner if they have several properties under their belt. You don’t need to be a millionaire to buy a second home. Buy-to-let mortgages are designed for people who already have a mortgage on their first home but want to purchase an additional property to rent out for an ongoing profit as well as a long-term investment. The main difference between a buy-to-let mortgage and a standard residential mortgage is that a buy-to-let mortgage allows rental income to be considered as part of the borrower’s normal income when calculating their ability to make repayments. As a result of the increased risk (i.e. the borrower being financially responsible for two properties), interest rates for buy-to-let mortgages tend to be higher and the maximum loan-to-value tends to be lower – normally up to only 80%. Beware though – buy-to-let has become so popular in recent years that it has pushed up property prices, especially for small homes and flats, and in some areas the rental market has become completely saturated, with many properties lying unlet for long periods. You need to be prepared for such an eventuality and decide what you will do in such circumstances. How and where you advertise the property can make a difference. However, it may be a good idea to take out buy-to-let insurance when you arrange your mortgage, to cover your repayments at times when the property is unlet and you can’t afford to meet the repayments in addition to your own living expenses. An alternative to taking out a buy-to-let mortgage is to remortgage your own home to raise the cash in order to buy the property outright. Property is an investment and if you’ve owned your home for a while, it may have accumulated a great deal of equity, which you could take advantage of by converting to cash through remortgaging. There are several specialist mortgage lenders who provide very competitive remortgage deals for this purpose – or any other purpose for that matter. The cash you raise from remortgaging your home can be used for whatever you want to use it for, from buying a second property to going on a luxury holiday to getting a new car. Some specialist lenders are even willing to lend to customers with bad credit or other problems with their financial history such as county court judgements (CCJs) or IVAs (individual voluntary arrangements) and have tailored products for this purpose. Look online today to see what could be available to you. This article is copyright protected and is not for republishing |
