UK Buy To Let Mortgages
UK Buy to Let Mortgages | Easy Money Or A Sting In The Tail?
UK buy to let mortgages seem a good way to make some easy money and with the way the BTL sector is growing, there are thousands of people who share that view. Since the 1990s more and more people have been taking out buy to let mortgages. At the end of the first half of 2006, data from the Council of Mortgage Lenders (CML) shows that there were 767,000 buy to let mortgages, with 152,500 BTL loans during the six month period. That means that there were advances for UK buy to let mortgages worth £17,500 million during the period, giving a total for the BTL sector of £83,900 million. The average maximum loan to value was 85 per cent, with a rental cover requirement of 125 per cent.
So what are the reasons for investing in UK buy to let mortgages? And is buy to let just money for old rope? Not quite. People often invest in UK buy to let mortgages because they want to produce some additional income and renting out a second property seems a good way to do it. But there's much more to UK buy to let mortgages than buying any old property and letting it out to any old tenant. As with any other investment, UK buy to let mortgages need to be planned and researched carefully.
Researching the BTL Market
Before undertaking an investment anyone contemplating UK buy to let mortgages should do some market research to determine the best areas to buy property in and the type of property with the most rental potential. This research can be undertaken by watching property programmes or consulting letting agents. This will ensure that there is maximum income growth from UK buy to let mortgages.
Of course, income growth is not the only impetus for buy to let mortgages. The average ownership of a buy to let property is 16.2 years, so that means that many buy to let landlords are in it for the long haul. When applying for UK buy to let mortgages, most landlords hope that their property will increase in value. Capital appreciation can provide an excellent return on the original BTL investment but even this has to be planned properly.
The length of ownership of the property is an important consideration when applying for UK buy to let mortgages, as property prices can suffer short term dips. It is also important to consider the best way of financing UK buy to let mortgages. The less money of your own you spend, the less risk you have, particularly if you have taken steps to insure your payments.
When taking out UK buy to let mortgages, it is important to think about what will happen when you want to get rid of the property. With capital appreciation comes capital gains tax, and early tax planning can help to minimise the tax you need to pay. It is also essential to think about inheritance tax as your thriving property portfolio could become a millstone for your heirs.
Buy to let is not just money for old rope. Instead, it requires careful and professional management. However, properly managed, there is potential for both short term income and long term capital appreciation with UK buy to let mortgages.
