Investor Mortgages
How Much Can You Make From Investor Mortgages?
So how much can you really expect to make from investor mortgages? If you invest in a safe market-linked fund you might do well to get 5% or even 7% back over the year. But with buy to let, the profits are sometimes much more considerable because investor mortgages allow you to glean rental profits while the property itself increases in value, multiplying your overall returns.
At the start of 2010, the combination of rental income and house price increases meant owners of investor mortgages got 10.6% yield on their investment, the highest returns for buy to let for two years*. This was a combination of investor mortgages bringing in an average of £658 a month alongside house price rises that were around 10% nationally**.
So why aren't all Brits investing in investor mortgages? Well for a start, it can be hard work in making these type of loans work for you. It means upkeep of a property, making sure tenants are happy and fully paid up and adhering to reams of regulation and law. There is also risk involved in investor mortgages inasmuch as choosing the wrong property and the wrong mortgage may mean profits are not easy to find.
Also, house prices can fall as quickly as they rise, so there is a risk that once you put your money into investor mortgages your property loses a percentage of its value. And then, of course, your profits are at the whim of your tenants - if they can't pay their rent then you can't make a profit. So investor mortgages are certainly not for the faint-hearted.
But to make money, you have to work hard and you have to take some risk. You could choose to invest in a savings account instead of investor mortgages, and you would be sure of safety and some returns without any effort on your part. But the returns from that sort of investment would be negligible compared to those that could be made from investor mortgages.
So if you are ready to make some serious money, talk to a mortgage adviser about investor mortgages. Making these investments work isn't a walk in the park and they do carry with them inherent risks. But few financial products will offer you the double-digit returns found with investor mortgages.
* LSL, 16/03/10
** Nationwide, Jan 2010
