Investment Mortgage Loans In UK
Investment Mortgage Loans In UK | The Pros and Cons
Investment mortgage loans in UK financial institutions are no longer rare. In fact, many people are choosing to seek investment mortgage loans in UK banks and building societies because of the growing trend to invest in property. While property investment itself is nothing new, it is no longer restricted to professional landlords. Almost everyone can now access an investment mortgage - and many people do.
Getting access to investment mortgage loans in UK financial institutions is almost as simple as applying for a residential mortgage, especially for first time landlords. In fact, a lot of the criteria for an investment mortgage are exactly the same. Many financial institutions will want to be assured of your ability to repay the BTL mortgage and will impose conditions about minimum income levels. With some investment mortgage loans in UK building societies and banks, the minimum income requirement can be anywhere from £10,000 to £15,000, but it may be higher depending on the particular requirements of each institution.
For new landlords applying for investment mortgage loans in UK financial institutions, proof of income might be the same as with a residential mortgage. That means that landlords may have to have a job and show pay slips proving that they are employed and have a steady income. However, that kind of proof is not necessary for all investment mortgage loans in UK financial institutions. Many BTL mortgage lenders lend to self employed or self certification applicants, though in some cases this facility is reserved for experienced landlords.
Rental Cover for BTL Mortgages
Another issue when applying for an investment mortgage is rental cover. Rental cover is the extent to which the expected rental income from the BTL property exceeds the interest payments on the investment mortgage loan. With investment mortgage loans in UK building societies and banks, there are wide variations in the way this is calculated. As a guide, most people applying for investment mortgage loans in UK financial institutions can expect to be asked for rental cover of around 125 per cent, but it may be higher or lower. And some institutions will take criteria such as pay rate and affordability into account when calculating the amount they are prepared to lend for a BTL mortgage.
The providers of investment mortgages may also impose conditions regarding the management of a buy to let property. Again, these conditions may be stricter for new landlords. Some lenders want to be sure that the property is managed by a qualified letting agent, such as a member of the Association of Residential Letting Agents (ARLA). This is because professional management tends to reduce the number of void periods for a property and therefore increase the chances that an investment property mortgage will be repaid on time. Borrowers who have taken advice from a professional letting agent and who are prepared to have their property managed by such a person may find it easier to qualify for investment mortgage loans in UK financial institutions.
