Investment Property Mortgage
Investment Property Mortgage | How To Protect Your Assets
Getting an investment property mortgage is a key issue for buy to let landlords. It is essential to ensure that you have an adequate deposit, and that lenders are satisfied that your rental income will exceed mortgage payments by a sufficient margin. Landlords will also want to be sure that they have chosen the right repayment method for their investment property mortgage. This choice may depend on whether landlords want to keep payments low or to build up equity quickly. However, there are other issues that landlords need to consider to protect their mortgage and the long term investment potential.
Like most other mortgages, investor property mortgages will require BTL landlords to have buildings insurance in place. This covers the building for anything that might be damaged, for example in a fire or flood. Buildings insurance for an investment property mortgage, like that for a residential mortgage, covers the rebuild cost of the property rather than the market value. However, bear in mind that the buildings insurance for your investment property mortgage may be invalidated if the property is left empty for more than a month.
When you have an investment property mortgage, it is also worth taking out contents insurance. The level of cover you will need will depend on whether your property is being let furnished or unfurnished. If your mortgage is for an unfurnished property, then you will need to insure carpets, curtains and appliances that remain on site. If, however, your mortgage is for a furnished property, you will need to increase the level of cover to include all items of furniture - beds, chairs, tables, lamps - whatever you have put in the property for tenants to use. Again, the contents insurance for your mortgage may also be invalid if the property is vacant for more than 30 days.
Although most landlords hope to have as few as possible, void periods are a part of the buy to let experience, so residential buildings and contents insurance may not be the best way to protect your investment property mortgage. Instead, your investment property mortgage can be protected with specialist landlord insurance. This incorporates the provisions of buildings and contents insurance, though tenants still have to provide their own insurance to cover their belongings.
BTL Landlord Insurance
A landlord insurance policy for your investment property mortgage might include coverage for accidental damage to glass and sanitary ware. There might also be protection through liability insurance for the landlord in case tenants sustain injury on the property. In addition, landlord insurance might cover landlords for legal expenses in case a tenant brings suit against them. Landlord insurance for your BTL mortgage may also cover landlords for emergency repairs to the property and non-payment of rents by the tenants.
A landlord insurance policy will protect the property, but a landlord should also consider another form of protection. In order to realise the investment, it is essential to keep mortgage payments on track, even if the landlord is ill. This means that life cover and critical illness cover are sensible options for any landlord with an investment property mortgage.
