Free Buy To Let Mortgage guide and experiences. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
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What is a buy to let mortgage?
A buy to let mortgage is a mortgage loan secured by a property that is rented to a third party by the applicant (borrower) and is not lived in by the borrower. It is also known as an investment mortgage, commercial mortgage or an investment property mortgage.
There are many online and upfront buy to let mortgage UK companies available. Because there are so many buy to let mortgage UK companies available the competition between them has become rather tight. Service standards as well as buy to let mortgage rates differ in huge amounts from company to company. It is recommended that you shop around for the company that has a fairly low buy to let mortgage rate; remember the lower your interest rate, the lower your monthly repayment and loan term.
What are the procedures of a buy to let mortgage?
- You should work out the deposit available for your buy to let mortgage. You can usually only borrow 80 per cent loan to value, so your deposit will determine your price range.
- You should get in contact with a local estate agent to find out about types of property most likely to be let in the area and the level of rents paid.
- Do proper research on mortgages and apply for the type you consider best. It will be expected that you provide an expected rental income and salary details.
- Place an offer on the property you want. Once your offer has been accepted, you should commission a valuation.
- If it is an old house, it is recommended that you should commission a Homebuyers Report or full structural survey.
- Instruct your but to let mortgage broker to carry out the purchase and provide him with details of the property, the estate agent, and the seller.
- Lender receives valuation report and, if all is in order, agrees the mortgage.
- Buy to let mortgage broker carries out local authority search and confirms legality of title.
- When you pay the deposit, sign and return the contract your buy to let mortgage broker will exchange contracts, which will mean you are now legally committed to the sale.
- You should get several quotes for any building or renovation work and decorating that may be necessary.
- You should get the builders, renovators and decorators in your buy to let mortgage home as soon as possible and advertise for tenants just before the work is completed. (Or employ the services of a letting agent to do this for you)
- Show the buy to let mortgage property as soon as it is ready, to potential tenants.
- When you have found suitable tenants, you should arrange with them to supply you (or the letting agent) with employer-, bank- and personal references.
- It is recommended that you require a deposit of one month to six week's rent to confirm the tenancy.
- You should check the property and write an all-inclusive inventory.
- You should always draw up a tenancy agreement and contract to protect yourself as well as your tenants.
- As soon as all documents and bills are sorted out, you can hand over the keys to the tenants.
