In light of the problematic nature of the current financial climate, many investors are looking for alternative ways in which to make their capital work for them in raising extra income. Interest rates and returns on cash investments are not necessarily high or stable under present conditions, and so one of the possibilities that more people are looking into is the landlord mortgage, otherwise known as buy-to-let. Whether an investor is acting alone or with the support of an umbrella company, the return on investment that is provided by many landlord mortgages is likely to form a tempting proposition.
What is a landlord mortgage?
In simple terms, a landlord mortgage, widely known as a buy-to-let mortgage, is a loan that is provided to a property buyer so that they can buy a property to rent it out to tenants. The property buyer does not intend to live in the property, but rather to gain income from the rent payments made by their subsequent tenants. As such, the income derived from the property is heavily dependent on the level of rent that is set in a rental agreement, and a large part of the welfare of the property remains in the hands of the tenants. In the past, some people have felt that landlord mortgages constituted a risky investment on this basis, but changes to the law in the United Kingdom mean that the last few years have seen greater security for landlords, and thus greater security for their investments. This, in turn, has had a positive effect on financing for landlord mortgages.
How to obtain a landlord mortgage
The assured short-hold tenancy laws that were passed in the United Kingdom in the middle of the 1990s gave landlords additional protection, and in turn made it more straightforward for prospective landlords to gain funding through buy-to-let arrangements. There are therefore more available deals for landlord mortgages now than there were a few years ago. The backing for a mortgage may still be easier to find by operating through an umbrella company, but there are still some steps to go through. First, the buyer should decide on the primary criteria to match their personal circumstances, perhaps in terms of available capital or required income. After that, it is a question of finding the estimate from a lender that best fits those needs, and of demonstrating that the buyer meets the financial requirements, such as income and capital.
Buy-to-let: a great option in the current economic climate
With investment interest rates often set extremely low and other income difficult to find, buy to let is a promising option for many investors in the current market. The yield on rental agreements has been steadily rising and in many cases outstrips the return on investment that other options offer. In addition, the mortgage rates available in buy-to-let deals have also become more favourable to buyers, making a tempting combination of lower outlay and higher income. For buyers who exercise attention to detail in specifics such as choosing a property and identifying tenants, the landlord mortgage market is better for investors than it has been for many years.