Detailed overview of Buy to let mortgages
It is a British term used to purchase property specially to let out, means to rent it out. Mortgage has been specially designed for this buy to let purpose only. In older times there was no such facility to buy property to rent the customers. There were many private individuals who were landlords of a particular land but were very small. It was very difficult to buy property to rent as it was preserve of professional landlords and also for those people who were rich to pay cash. The only person who was wealthy could perform buying of property. That time there was unavailability of loans, advice or information thus after few years slight changes occurred when Assured short hold tenancy came into process. Business buy to let mortgages was still absent but this new tenancy brought some advantages. This tenancy provided the landlords and lenders a huge confidence in terms of tenants that would only reside in the property for fixed term. With the change from old to new modern world buy to let mortgages also changed and brought new best offers for all business holders.
In this, an investor can borrow money to buy property in the private rented sector to rent it out to tenants. This business buy to let mortgages started in UK on 1996 since now. Here the lenders are free to decide how much they desire to lend by using different technique rather than owner occupied property. The common method in this process is interest only option which is fixed or variable rate. There are many benefits of business buy to let mortgages along with risks which you need to understand to know better. The person who buys property is just a business holder who will not live in it rather attract tenants to live as renter. Those business holders going to have buying transaction, they may have to pay high rates compared to standard residential mortgage. The maximum percentage of loan you can apply for is 85% or even less than.
Some risks you should know about
If you are good in managing, property investment can be wisely managed by you as it has some risks you have to face. The first important risk may occur is when a tenant is unable to pay sometimes the landlord will be in trouble because they are totally depended on rental income to pay back the loan they had taken. Thus the property will be blank and they will fail in maintaining their mortgage repayments. Other risk involves needs to be noticed by those looking to buy property; thus some serious repairs might get included and this can increase overall costs.
If you are planning to buy to let mortgages, be ready to face all those risks involved in the same. There you will also find broker which will work as intermediate to limit your options while choosing direct. Recheck and study though all the essential points needed because it is not a small buying, it is a large investment, though a good return of investment may also come but alertness is good.