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[B1146]Buy To Let Mortgages Rates

by Richard, Ric

Since its inception in 1996, the buy to let mortgage has provided investors, cash rich individuals,professional landlords etc. with a comparatively safe investment avenue whichis not only bound to appreciate in the long term, but also provides a steadyand reasonable return in the form of rent received from tenants.

Given the current bloodbath in the real estate market and therecessionary trends in the economy in general, such a positive perception onbuy to let mortgages in the UK may behotly contested by doom sayers.

However, when one talks of buy to let mortgages, the description?long term investment? immediately comes to mind. Undoubtedly, propertyinvestments are long term investment options by nature where one needs to beprepared to wait for the returns to come in over a longer time period as theproperty gradually appreciates in value. For anyone else looking for immediategains based on speculative investments, such as in the stock markets, one needsto be prepared to make profits as well as suffer setbacks from the volatility inthe market.

Coming back to our buy tolet mortgage discussion let's first see why buy to let investment makes sense.

Benefits of buy to letinvestment

Property investment is a more stable investment as compared to the stock markets which can swing like a yo-yo overnight. Property markets are not this volatile. Any impending change in this market's contours can be detected by the smart investor long before it actually happens.

You get to own a tangible asset, something which can be seen and felt, rather than a piece of paper which overnight can become exactly what it is ? just a piece of paper if the stock suddenly erodes in value.

Buy to let property owners are better placed to ride the downturn compared against other investors, since whatever happens they will be earning rental income which will fully or partially take care of the mortgage repayments.

Factors like increasing population, rising divorce rates, single occupancy, university students etc. will always keep the rental property market in growth mode thus making buy to let investment a bit like an evergreen investment. Add to this, the previous home owners who lost their homes because of foreclosure and the future seems promising indeed.

Tips for good buy tolet investment

Theabove mentioned points must have cleared your doubts about the viability of buy to let mortgage investments. Now I will give yousome tips about how to invest in this market wisely.

Consider the location: Don?tfinalize a property only because it is situated in a posh locality. Rememberyou are not going to live in it. So you must get a property which is ideallylocated for your target tenants. Like if you are targeting the Universitystudent segment, you need a property which is closer to the college and islocated conveniently near budget markets and public transport facilities.

Know your target tenants:This is very important not only to decide location but also to decide upon thekind of rental you can expect and the kind of amenities you are going toprovide. To extend the example of students, you certainly won't provide plushinteriors to the students as they are not known to take care of their dwellingsproperly. Moreover with this verification you will also get to know about theircharacter and financial viability.

Get the propertyadequately insured: Accidents do happen and even if you are not atfault, as an owner you will have to pick up the tab. So don't be caughtunawares and insure the property adequately. This would also help you secure abuy to let mortgage.

Negotiate the bestmortgage deal: Even in these depressing times you will findwilling lenders provided your financial situation is sound and the targetproperty has potential. But don't go with the first one you come across. Takehelp from professional brokers who will line up the best buy to let mortgagesin the UK.After you have located the better ones, negotiate hard for good terms such astenure, interest rate etc.

Now there are almost 50 lenders who offer a wide range of buy-to-let mortgages in the UK, and the list is constantly growing. There has also been a huge increase in the number of buy-to-let mortgages approved with the number growing from approximately 50,000 in the year 2000 to over 220,000 in 2005. This is clear evidence that investing in property has grown substantially in popularity.

The first set of buy-to-let mortgages released contained high interest rates and strict lending criteria. Large deposits were required and rental cover requirements were restrictive compared to the products available today. Perhaps as a mark of the success of the industry, interest rates have fallen considerably and lending criteria has softened.

Such changes have been largely consumer driven. More and more people are looking to develop buy-to-let property portfolios in order to create personal wealth over the long-term. Property is seen as a solid and predictable investment vehicle and a good way to provide funds for retirement.

Because property investment is a long-term venture it is best to undertake plenty of research and not rush into the market. Intensive research is important in order to ensure that the right properties are selected to suit the individual investor's goals. Investing in the wrong properties can lead to financial disaster so it is important to conduct thorough research rather than invest in property based on a slick sales pitch.

Presently buy-to-let mortgages are assessed on the property's income rather than the personal income of the investor. Lenders want to know how much income a property will generate and what the expected outgoings are when considering a loan application. The application will be assessed as a business proposal.

An investor's personal income can sometimes be taken into account in order to bolster the application if they have sufficient excess over their personal expenses. Experienced investors may also find the application process easier than new investors because lenders will perceive them as less risky.

Lenders will also require the investor to fund part of the purchase, usually in the form of a 15% deposit. The rental income will also need to fund at least 120% of the monthly mortgage payment, although these variables change over time and between lenders. These requirements have softened in recent years but they can change back at the lenders? discretion, depending on the state of the property market.

The market for buy-to-let mortgages is fluid and has changed greatly over the last 10 years. No doubt it will continue to evolve and astute property investors will do well to keep up with the changes. It is a good idea to keep in touch with an independent mortgage broker to keep abreast of the constantly changing market of buy-to-let mortgages.

Article Source : strategy and finance

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Both Richard & Michael Sterios are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Richard has sinced written about articles on various topics from Online Marketing, Skin Care and Hoodia. Buy to let mortgages have been quite a popular way of investing in the UK. This article lists some of the benefits of this investment avenue and provides some tips for wise investment.. Richard's top article generates over 110000 views. to your Favourites.

Michael Sterios has sinced written about articles on various topics from Internet Marketing, Adverse Credit and Home Improvement. To contact an independent about your next. Michael Sterios's top article generates over 165000 views. to your Favourites.