Understanding Buy to Let Mortgages.

Buy to Let.

Encouraged by the 1988 Housing Act which gave landlords much more control over their properties, the Buy-to-Let sector of the mortgage market has seen remarkable growth in recent years. And as house prices continue to maintain their current high value, it is seen as a very attractive means of investment with immediate visible return.

With an increasing availability of mortgage funds and lower and variable interest rates, for many the opportunity of buying property in order to let it out and at the same time retain overall ownership, has become an alternative to the once reliable, but now very precarious cash pension building plans. Quite often the amount of rental charged to tenants covers the whole cost of the monthly mortgage repayment on the house, and may even bring an initial profit. There is also the advantage, though possibly this is not the prime motive of the buyer, of providing much needed rental property at a time when housing stocks have been severely depleted, due in large part to the take up of Council House purchase.

The incentive to the buyer is to cover the cost of the mortgage without any, or very additional outlay, whilst allowing the value of the house to appreciate and the mortgage capital to reduce.

Success in this sphere is more likely if the location, facilities and building itself are attractive to tenants. And it is very important to research both the mortgage and property markets before embarking on a Buy-to-Let project. It is also essential that the legal responsibilities and rights of both landlords and tenants are thoroughly understood. Prospective buyers, who may not desire direct involvement with rental arrangements, may also consider the use of Letting or Leasing agencies who, for an agreed fee, will deal with any problems with tenants and monitor maintenance issues.