Are Buy to Let Mortgages the Right Option for You?

Are Buy to Let Mortgages the Right Option for You?

Investing in real estate is a great method to increase your portfolio and ensure the long-term growth stability of your money. But if you want to maximize the benefits you get from it, the best option is to make use of buy to let mortgages or other self employed mortgages that will allow you to invest less of your money while buying properties.

Everyone’s situation is different. And with so many mortgage options such as self employed mortgages available on the market, it can be quite difficult to know which one is the best alternative for you. So, in this article, you will find all the information you need about the most common mortgages used by real estate investors. You should know which option fits your needs and requirements the most.

What Makes Buy to Let Mortgages Different from the Rest?

As the real estate industry grows, business methods and tactics also develop. In the past, you could only find the standard type of mortgage, and regardless of your purpose for buying a property, you could only get the same type of mortgage. But nowadays, that fact has changed. There are many other types of mortgages that you can choose, such as the buy to let mortgages.

So, what are the differences between a standard mortgage and the buy to let version? Well, for a standard loan, you will have to pay both the principal and the interest monthly over the period of the loan. On the other hand, with most buy-to-let options, you only need to pay the interest monthly. As for the principal, you will be able to pay it in full at the end of the agreed period.

At first glance, you may not see any advantage to using this method. And it is indeed not the best option for most situations. But in some cases, this option can provide many advantages. But this applies only to investors that will use their properties as landlords. And that they also plan to expand their portfolio in a short period.

special loan

Buy to Let Can Also Be Considered a Type of Self Employed Mortgages

The self employed mortgages are another type of special loan alternative for real estate investors. As the name implies, these loans are specially designed for business owners or those that do not work as employees in a company. As the method of making money is different, the set of factors used for these mortgages is also different.

The minimum requirement to be considered self-employed for these types of mortgages you will need to own at least 20-25% of your business. You can find more details about the usual deposits in UK here. Also, you will need to provide some evidence for self-employment for a period of 1 to 2 years. Most lenders that provide this type of loan will ask for two years, but you can also find some loans that only require one year. Of course, the best way to find these loans is with the help of reliable mortgage brokers.

Some Details You May Want to Know About Let to Buy

The first detail and difference compared with standard mortgages that you should know about the buy to let option is the deposit that you need to invest in the property. You will need 25% in many cases, but the range can vary from 20% to 40%. So, you need to make sure you have enough money available if you want to make use of this borrowing method.

The amount of money you can borrow also depends on the potential rental you can get from the property. Obviously, the higher the potential, the more money you will be able to borrow. Of course, the money you currently make will also affect the available loans you can choose. In many cases, lenders will only offer loans if you already earn more than £25.000 pa.

What Are the Most Common Self Employed Mortgages Requirements?

Maybe they buy to let mortgages are not the best option for you. So, you may want to choose another type of loan. How about the standard self employed mortgages? What requirements should you pay attention to while looking for this type of loan? You need to pay attention to 2 common requirements that you will need to meet for every single one of this type of mortgage:

Income stability is the first requirement that you must be prepared to prove. As mentioned above, most lenders will ask you for at least two years of proof that you are self-employed. And in those proofs, your revenue must be included. You must have the ability to make monthly payments. And if your earnings are not stable, then you may not be eligible for many of these mortgages.

Why Should You Collaborate with a Broker to Find Buy to Let Mortgages?

You should let a mortgage broker help you find buy to let mortgages for too many reasons. But you should focus on a couple of them. Firstly, your time is a very valuable resource. If you do not have the network and are not a master broker yourself, you will surely waste a lot of your time looking for the right loans. And it will also take you at least three times more time. On the other hand, a broker can do this work for you and save your time while also being more efficient and helping you find the perfect mortgages faster.

And secondly, you can gain a lot more than simply finding the right mortgage if you work with a broker. You will be able to learn a lot of knowledge that you can use for future deals. Your network can also increase massively, and it will be easier for you to find better loan opportunities in the future. Depending on the brokers you choose, there are other benefits you may get as well. But even these two should be more than enough to convince you that you need to collaborate with a broker.

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