Whether you are just starting out on the property ladder or expanding your property portfolio, getting the right mortgage can make a huge difference to your returns.
Most investors spread their capital over several properties and do so via finance, but you should explore how much your property is going to cost and ensure you can afford the monthly payments. A buy-to-let mortgage is a loan designed for investors who intend to lease their property out to a tenant, rather that occupy it for self-usage. These mortgages often require larger deposits and the interest rates and arrangement fees are slightly higher than those of a standard residential mortgage.
If you are looking to purchase one or two properties for your pension then it may be preferable to go to a bank, but if you are buying multiple properties for a larger portfolio you should speak with a mortgage broker or specialist lender. Your accountant will also advise you of the best option to choose.
WHAT TYPES OF MORTGAGES ARE AVAILABLE?
You can choose to pay either interest only or capital repayment.
Interest only mortgage: – mortgages where you only pay the lender the interest payments for a fixed term.
Repayment mortgage: – a capital repayment mortgage allows the investor to repay the value of the loan plus the interest over a fixed term.
It’s always advisable to get an Approval in Principle (AIP) before committing to buying your property if you are looking to obtain finance further down the line and if purchasing an off-plan property. An AIP indicates how much you could borrow based on the information you have provided, it performs various criteria and credit reference agency checks, and gives a conditional decision to lend based on its findings.
If you have any questions or would like to speak to a specialist advisor please contact us.