Most people who have been following the residential property market generally perceive that long-term investments in this market provided consistent returns. While this is not investment advice by any means if you have been eyeing the residential property market, a buy to let mortgage might be just what you are looking for.
With the onset of the pandemic, many lenders were unable to perform valuations. This led to a reduction in the availability of active buy to let mortgage deals. However, now that people have started going back to work, it has become possible for the lenders to conveniently evaluate your property, your financial profile, and the mortgage you are seeking.
So, if you are seeking the best buy to let mortgage, use this framework for ensuring you get one at the end of your searching process:
1. Evaluate the Rental Property Market Exhaustively.
It is as important to understand the dynamics of the rental property market you are entering to understand the terms of your buy to let mortgage deal.
The rental income you earn will be responsible for paying off the interest on your debt and recurring expenses like maintenance, legal fees, rent for the land, and so on. Thus, it is the most important cash-stream in the entire deal.
Before you decide to hunt for the best buy to let mortgage rates:
- Make sure you understand the rental income potential of your property.
- Conduct your own research on the rents in the municipality, facilities in the neighbourhood your property is located in, and even the rents’ fluctuations.
- Along with this, make sure you have a reasonable understanding of the resale value of your house.
Even if you do not plan to sell it anytime soon, this information can help you move quickly through a transaction in case you are liquidating the house to pay off the principal amount in the mortgage.
2. Get a Good Buy to Let Mortgage Broker Early in the Process.
While you are conducting research on the property market for rental and resale values, you would also be working with property valuation professionals, lawyers, insurance brokers, land-owners, municipality officials, repairs & maintenance professionals, and several others. A buy to let mortgage broker can ease your burden early in the process.
When your focus is split across different priorities, it would be nearly impossible to source, compare, and analyse the best buy to let mortgage deals. A broker who specializes in such areas can help you find a larger set of suitable buy to let mortgage deals, advise you on filtering between these, and then advance the process. Besides this, a good mortgage broker will also serve as a soundboard for any questions or concerns you have about the deal.
3. Make Sure You Understand the Ancillary Expenses.
The most common form of ancillary expenses associated with a buy to let mortgage deal are:
- Property Acquisition Charges: Fees you have to pay for documentation and property valuation when acquiring the property.
- Taxes and Insurance: The rental income would be taxed at a certain rate. Plus, you will be some form of building insurance or landlord’s insurance. Some landlords also take up rent guarantee insurance covering them from situations where their tenant fails to pay the rents.
- Maintenance and Repairs: Since you provide a service in the form of residential space, you would have to ensure that the property is not hazardous and the repairs are taken care of. Many tenants and letting agents add maintenance and repair clauses in the rental agreements to enforce quick and substantial repairs.
Along with these, you would also be paying the processing fee to the lender and the estate-valuation fees to a property appreciator. It will help you ease your burden if your mortgage broker does not charge additional fees for its services.
4. Maintain a Considerable Financial Profile and Initially, Look for a Smaller Mortgage.
Lenders would be more comfortable if you already have a property you inhabit and own. Additionally, make sure your credit history is good, and your income streams are clear. If you are just starting with your first buy to let mortgage, go for a smaller mortgage. You can do this by either acquiring a smaller property or by paying a larger deposit.
A buy to let mortgage deal has many moving parts. A mortgage advisor like Zinga Mortgages can help you find better btl mortgage rates and advise you on choosing the most appropriate deals at no extra fees. Get in touch with Zinga Mortgages to begin your homeownership journey – today.