The term “investment mortgages” is a relatively new term in the world of financing the purchase of property and, as such, may be one of those that very few are aware of. However, investment mortgages look set to make a massive impact on the property market in the coming years as it represents the major growth area of the market. Although the amount of individuals buying property has slightly declined overall in the last few years, the number of individuals procuring investment mortgages has dramatically increased. There are a number of valid reasons why, as you will see as we go into the basics!



An investment mortgage is a mortgage that is taken out to purchase property that is not designed to be the family home of the individual whose name is on the deeds. Instead, it is designed to be an investment. This property may be used as a second home or as a buy to let property or even as one of many in a portfolio. Property is a popular area of investment at the moment and with good reason. A man that has property is a man that has a financial future!

The nature of investment mortgages and the property that they are designed to cover are very different to those designed for a family home. In fact, the property purchased under investment mortgages does not even have to be homes. It can be commercial buildings or areas of land for development, for example. That is totally up to the buyer, but it is the investment mortgages that give him or her the means to buy. In fact, several buildings or areas of land can be covered under the same mortgage here or an individual can hold several at one time, unlike conventional mortgages.

Investment mortgages also differ from conventional mortgages in that it is not necessarily the buyer that has to pay the mortgage back. If this sounds confusing then read on! As the property bought under investment mortgages is designed to generate an income, it is that income that actually repays the mortgage. This is assessed in terms of potential revenue in advance by the lender and, as such, it is a somewhat specialist are. As a result, this kind of mortgage cannot really be found on the high street. Instead several specialist companies that have a lot of relevant experience in this area of the market provide it.

Those companies will indeed assess the value of the land against the price paid for it and the income that it is likely to generate in a year. After the buyer has convinced them of its value, a deal is struck for the provider to take a certain percentage of that money in order to repay the mortgage. Of course, it is much more complex that this when you begin to look into the terms and conditions of individual policies. However, if the information about investment mortgages above sounds lie something that you could need in the near future then you should begin to look at your options as soon as possible!