Buy To Let Rates
Are Buy To Let Rates Good Or Bad Right Now?
The first thing to realise is that, yes, buy to let rates are different but they are created in the same way. Mortgage lenders need to borrow money from other banks to raise enough capital to create mortgages. But the credit crunch has meant that there is no trust between the banks and they will not lend to each other - there is no credit. As a result, all mortgage rates including buy to let rates have had to go up. Credit limits have tightened and loan to values have also risen as lenders batten down the hatches. So the first thing to know is all rates are bad right now, not just buy to let.
But buy to let rates have very different factors affecting them. One of them is rental income - lenders know that property investors use rent as a means to pay back mortgages. So they integrate the rental potential of a property into their calculations. And right now rental is booming - because people cannot get hold of residential mortgages, they need to rent. This means landlords, particularly in the cities, can raise rents as competition for space increases. This means buy to let rates will improve as risk decreases. They might not improve dramatically, but if you do your homework and make sure you are buying in an area of good rental income, you can get hold of a better deal.
Buy to let rates also depend on the borrower. If you have a great credit rating, you can get hold of great mortgages. This means if you want good buy to let rates, you need good credit. Going online and checking your score could help you find out how good a buy to let deal you can get. Those looking to become landlords must understand that all your finances are interlinked: your mortgage, your past and present debts, your income and your investments. So your buy to let rates are made up of all your other financial responsibilities - the mortgage lender is basing their risk on you, as well as your property.
How good are buy to let rates right now? Well that depends on the borrower and it depends on the property. Talking to an adviser will help you understand what sort of borrower you are and spending time choosing your investment will help you understand what sort of property you are investing in. Buy to let rates are important, but taking your time, taking advice and being sensible are paramount.
