Buy to let mortgages are, if utilised properly can be a second form of income and can become very profitable. Buy to let is booming in the UK with the market growing strong during 2005, 2006 and into 2007 and prospects of the buy to let market doubling by 2010 (Source this is money).
So joining the buy to let market could become even more popular, and one of the most attractive areas for investment is the capital, London. With higher property prices, a huge tenant demand and growing property prices, this is a great place to start or continue buy to let investment.
Buy to let mortgages in London are popular, we can help you apply for a mortgage on a buy to let in London, if you are looking to start or increase your property portfolio, London is a great prospect for an addition.
Reports from Alliance & Leicester and the centre for future studies predicts that the rental sector will continue to soar over the next decade. This role will have a huge effect on the UK housing market.
With more and more landlord mortgages in place, more seek to grow or start further investment, london buy to let mortgages also growing in popularity. At present over 767,000 loans are outstanding for landlord mortgages, accounting for more then 8% of the mortgage market.
With more and more investors looking to expand their portfolio in London, its only a matter of time before the market lenders make further adjustments.
Buy to let mortgages in London are good for investment, with the London olympics on its way, more and more people are looking to rent, or move into London on a permanent basis, and as a result, the demand for tenant accomodation will continue to increase. Buy to let mortgages in London will provide properties for tenants to move in, and with the rent in London being higher then anywhere else in the UK, its no wonder more and more people are looking at buy to let mortgages in London.
Predictions show that by 2016 the mortgage market will have around 12% consumed by buy to let mortgages, factors that affect this growth are based on the rise in the traditional rental market.
London and the South East form the main hub of buy-to-let properties, with more than 40% of landlords owning in the region. Stephen Leonard, director of mortgages at Alliance & Leicester, said: 'Demand for rented property has been growing steadily in recent years and returns on buy-to-let have increased.
With this buy to let mortgages in London are expected to triple by 2012.
If you are looking to apply for a mortgage on a buy to let property in london or are looking to increase your buy to let portfolio then we can help you. You can apply for a buy to let by filling in our application form or by requesting a call back (top left hand side).
One of our friendly advisers will contact you back to discuss your buy to let needs further.
Here are some additional tips for buy to let mortgages.
1. Choose the Right Property
Remember, it has to be right for those looking to rent, choosing a nice looking property in an impractical location wont help, you need to counterweigh your options to make the right choice, is the property in the right location for those looking to travel? what about local amenities etc.
Location, location, location, vital to choose the right location and a property thats not likely to suffer large maintenance costs anytime soon.
You can use our amenity locator to research the area.
2. Choose the Right Mortgage
Check with your lender to see how much you can borrow. As a rule most will only allow you to borrow around 85% of the value of the property. Almost all lenders will take the expected rental income from the property into account when deciding how much to lend.
As a guide your rental income should cover 125% of your monthly mortgage payment. This will also help against other costs.
3. Work out all involved costs against your expected income, be realistic
Work out how much your monthly mortgage repayment will be and whether the expected rental income will exceed this. Checking out the rental prices of similarly sized/types of properties advertised in newspapers in your area will give an indication of whether this is a possibility.
Also look at whether you could afford your mortgage if interest rates shot up and the property is unoccupied for, say, three months.
Remember to cover as many scenarios as possible, i.e. if taking up a buy to let in London, could you deal with any unoccupied periods over a stretch of time?
4. Consider the 'Hidden Costs'
As much as people hate it, hidden costs are dotted between various products in the buy to let market, with companies involved from solicitors to lenders, its important that you are not stung with hidden fees. Here at a mortgage 4 you, we make you aware of any charges involved.
5. Budget for Ongoing Costs
You are responsible for ensuring that the property meets health and safety standards. Local authorities require that you comply with fire regulations, which could mean you have to put in fire doors and smoke detectors.
6. Choose a Professional Letting Agent
You might consider using a professional letting agent. They will find tenants, collect the deposit and the rent and arrange the inventory and tenancy agreements. But they don't come cheap. Expect to be charged anything between 10% and 17.5% of the gross rental income that you receive. However this cost takes alot of the inconvenience out of your day and can free you up to resume other activities.
7. Ensure you have the Right Insurance
As the owner you are responsible for insuring the structure of your property, which includes any permanent fixtures and fittings. It is vital that you check your policy as many buildings insurance policies exclude buy-to-let.
8. Sort out your Tax Position
You have to pay income tax on any rental income you receive, although you can deduct some expenses, and you will probably be liable for Capital Gains Tax when you sell. Always consult an accountant before entering the market.
9. Get a Fully Flexible Mortgage
This type of mortgage can be ideal for buy-to-let as you can fluctuate your payments in line with rental income.
10. View Buy To Let as a Long-Term Investment
Don't expect to make a quick profit on rental income and equity gain in the property. The forecast should be for medium- to long-term returns between 5-10 years.
Take these options into consideration when it comes to buy to let mortgages in London and in general.
We have helped many first time investors start with a buy to let mortgage in London.
