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Choosing the Right Buy to Let Mortgage

By Graham Baylis

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Published: 04May2011
Word count: 551
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Many people choose to purchase a property and then rent it out. This is one of the main ways landlords operate and it's generally done through a buy to let mortgage. This is a special sort of mortgage, made easier in the UK by the 1988 Housing Act. The Act made investing in private property more attractive to landlords as it made it easier for them to find buy to let mortgages. So, how should you go about choosing the best buy to let mortgage?

Firstly, you need to make sure it's the right thing for you to do. After all, owning a buy to let property entails different legal obligations to getting a mortgage for your own home: you will essentially be running a small business, so you need to make sure you have all the necessary legal requirements in place.

The next thing to do is to go about choosing a property. This means researching the area where you would like to own your buy to let property to work out the best location for it. It can often help to visit estate agents familiar with the area to get their advice on the best options. The type of area you choose might also affect the sort of tenants you attract, so this is another issue to consider - are you looking to attract young singles or couples, families, students or other people?

When looking for the best buy to let mortgage, one really important issue you need to think about is the interest rate you'll be paying on the mortgage. This will help you work out how much rent you will need to be taking in order to make sure you meet your monthly mortgage payments - if you end up making a loss on the rent, this could hamper your ability to meet your mortgage commitments. It's often a good idea to choose a mortgage with a variable rate as this means you'll benefit from any changes in the base rate of interest. However, if you want to know more exactly how much you'll have to pay each month, then a fixed rate mortgage might help you to manage your finances better.

You also need to consider your finances before you consider taking out a buy to let mortgage as you'll often need at least a 15% or even 25% deposit. Depending on your available capital, it might shape which buy to let mortgage you choose. A lot of lenders also like to know that you'll be taking in 125% of the mortgage payment in rent every month, so you need to do your sums beforehand to make sure you can meet this. A few lenders are more relaxed about this, however, so this might be something you want to consider before making a firm choice as to which mortgage to go with.

If you are unsure of how to go about getting the best buy to let mortgages, then it can often be a good idea to talk to a specialist financial advisor who will be able to give you information about what's out there and your best options. This might open you up to good deals you otherwise might not have been aware of.

Home ownership has changed dramatically recently, many now living in rented accomodation and not owning their own home. This need has led many into the world of Buy to Let. Graham Baylis has found that for most this means finding a buy to let mortgage broker like http://www.berkleyvittoria.co.uk/

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