How To Secure a Buy to Let Mortgage

Due to the effects of the global economic crisis, the buy to let market has suffered somewhat in recent years. Thankfully though, it seems things are slowly but finally recuperating, so if you’re thinking of securing a buy to let investment, now is a good time to do so. A decrease in house prices, attractive mortgage deals and rising rents mean that buyers are once again being enticed into making buy to let investments. The difference now however, is that you’ll need a bigger deposit and may find the process slightly tougher in comparison to the "boom" years.

Those who already possess a Buy to Let property investment may now be benefitting from the dip in rates, many of which will have plummeted to the lender’s standard variable rate, with many buy to let deals offering a revert rate that tracks the bank rate, rather than a typical SVR.

Thanks to property prices having fallen to more affordable levels, it’s the perfect time to invest for rental returns rather than capital growth.

But before you begin your search for properties, it’s advisable to look into the cost of the type of property you desire and calculate the rent you are likely to obtain from it. One of the simplest ways to do this is to use a buy to let investment calculator, which will help you work out your buy to let return on investment.

A traditional Buy to Let lender will want rent to cover 125% of mortgage repayments. Many also look for a 15% deposit to protect against decreasing prices and as much as 25% (often more), especially during tougher times. But as a property investment, buy to let is still very much a tempting option for many.

An important question you must ask yourself before taking the plunge is what will happen if your property sits empty for a few weeks. Will you be able to afford the mortgage repayments if your property is without tenants for a month or two? Find out what the vacancy rates are like in the area you are looking to buy in and compare with those of the surrounding areas.

You might want to rethink areas with high vacancy rates before jumping straight into the investment. Buy to let vacancy rates which are low, typically means that tenants will find it more difficult to find a place to rent. This can lead to an increase in rental prices with more tenants looking to occupy a smaller area of rental properties.

Buy to let investing requires a lot of research. Before you commit to anything, always make yourself aware of the risks involved, as well as the benefits of entering into the market. 

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*This page is provided for information purposes only and should not be construed as offering advice. Flex Profit Hub is not licensed to give financial advice and all information provided by Flex Profit Hub regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.