Advantages Of Buy To Let Mortgages In UK
The Advantages Of Buy To Let Mortgages In UK Property Investment
There are several advantages of buy to let mortgages in UK lending institutions. This is perhaps why so many people are entering into buy to let agreements and so many lenders are providing new BTL deals. Among the advantages of buy to let mortgages in UK banks and building societies is the possibility for people to increase their monthly income. Renting out a property can add a tidy sum to the monthly coffers, which can be used for savings, holidays or other luxuries. Research from Paragon, a major BTL mortgage lender shows that the average rental income earned on a BTL property in 2006 was £10,000. In January 2002, the average rental yield according to Paragon, was 9.84%, with £8,630 worth of rent a year delivered by an average property costing £87,714. In January 2008, this had fallen to an average yield of 6.2%, with £11,581 worth of rent delivered by an average property costing £187,748.
Also included in the advantages of buy to let mortgages are the possibility of long term capital growth on the rental property. This is one of the key advantages of buy to let mortgages. Figures for 2006 from a major mortgage lender suggest that buy to let property owners made more than £7,000 in capital appreciation during the year.
Potential rental growth and capital appreciation are two important advantages of buy to let mortgages in UK financial institutions. This is especially true in a situation where people are working longer and living longer, with less government money available to fund health care and retirement income. However, there are other social issues that also highlight the advantages of buy to let mortgages.
BTL Demand
Among these is the situation for first time buyers. Many potential first time buyers are struggling to afford the cost of getting on the property ladder, with starter homes going increasingly out of reach. This is particularly true in London and other areas of high capital appreciation. While there will be significant advantages of buy to let mortgages in UK financial institutions for investors who have owned property in those regions, first time buyers are being priced out of the market and are staying longer in the rental sector. This is good news for buy to let investors, as it adds to the advantages of buy to let mortgages in UK lending institutions.
Other people who might experience the advantages of buy to let mortgages are those who cater for the increasing number of migrants to Britain. These are people from countries new to the European Union who are now able to live and work in Britain. They, too, spend a long time in the rental sector compared with British renters, and we expect there will be more than 100,000 such migrants a year over the next few years. This adds to the advantages of buy to let mortgages.
So the advantages of buy to let mortgages in UK banks and building societies cannot be overstated. The BTL sector provides accommodation for potential first time buyers, migrants, students and contract workers, among others. It also helps thousands of people to increase their income and provide for their retirement. These are significant advantages of buy to let mortgages in UK financial institutions.
Please be aware that there are potential downsides to all investments. With any buy to let property there is the risk that the property may depreciate in value or there may be times when the property isn't let.
