Mortgages are a financial product that, much like any other, come in all shapes and sizes. Some are easy to get, others not so. Some mortgages will have different criteria to others and each mortgage will vary between one lender and another.
Buy to let property mortgages are different to your average mortgage for a residential property because the amount you can borrow depends on your projected income figures. Of course, this will vary in different areas of the country. Some towns and cities, particularly those with a large student population, have high demand for rental properties and therefore the rental yield promises to be pretty consistent.
However, try to borrow against a buy to let property in a sleepy village and this could present more difficulties. You can argue that it will be a holiday home for the more discerning visitor and you will be able to rent it out through high season but it is unlikely this will be enough to convince a bank of lending you any substantial finances.
It is relatively easy to research the rental potential in your proposed area. A look through the papers at what is already available to let and even the adverts that are placed by people looking for accommodation will give you an indicator of what the competition is like. You can also talk to local estate agents and letting agents. From this information, you will be able to glean the facts regarding what properties are called for, what accommodation shortages there are in the area and what the rental potential is.
Once armed with this information, you can then approach a lender with a respectable business plan indicating how likely it is that you will be able to rent out your buy to let property and what you can expect to earn. If you take the time to do this research, although the bank will have some figures of their own, it demonstrates a serious dedication to make property letting a worthwhile venture. This could well sway the lenders opinion as to whether or not to forward you a buy to let property mortgage at all.
Of course, when deciding on this matter, the banks may well take into consideration your other financial commitments to ensure you don't overstretch yourself. This is understandable, given the amount of repossessions that are occurring amid our current credit crunch. At the moment, there is a distinct difficulty in getting on the property ladder in the first place so many buy to let mortgages will often be given to people that are seen to be managing their finances adequately already.
They will also take into account that, because of the difficulties for first time buyers, rented accommodation is more in demand. Anything from a bedsit in central London for the city worker on his way up the ladder to a large family home for those looking to re-locate will all be in demand. Cities with a university are also popular places to buy up property to rent given the large student population.
If you are considering this type of venture, then you would do well to also state that you would use a management service. This will help to protect your investment against mis-use or abuse, giving you and your lender peace of mind for your property investment. |
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