With the income from rentals steadily increasing in recent years, the process of letting out properties can result in a lucrative way in order to maintain an income that is steady and regular. When wondering is buy-to-let a good investment, it will depend on finding the right type of property and a good mortgage. In the ideal situation you could make rental yields of about 5 to 10% dependent on where the property is based.
Even though the buy-to-let could be a great investment, keep in mind that there are also risks to think about. It is really essential to ensure you have worked out your sums and also thought about all the aspects involved in renting a property out before you commit to this type of mortgage and becoming a landlord.
Is Buy-To-Let A Good Investment And Finding The Right Type Of Mortgage
Finding the best type of mortgage is important to make sure you will be making a return on the investment. The buy-to-let mortgages are usually more expensive when compared to residential loans as they are regarded as larger risks by the lenders. However, you can still find competitive rates through some of the lenders.
In addition, the buy-to-let mortgages will also normally require a deposit that is higher. The typical minimum is usually set at 25%, and if you have a larger deposit available of 40% or more, then you are more likely to obtain a better deal with a lower interest rate.
One of the other considerations on the majority of the buy-to-let deals will be interest-only mortgages. This means once the term comes to an end, you will have to sell this property in order to clear your loan or find another way to pay it off. Selling the property may be suitable to you if you never had plans to live in this home, but if you prefer not to sell, another repayment plan needs to be in place.
How Does Rental Income Affect A Mortgage
The lenders will consider the potential income from rental on the property to make a decision on the amount they are prepared to lend you. Finding out about an estimate on what type of rental you can expect from the property is easy. You can start with property listings in the area or chat with a letting agent to give you advice on properties that are similar in that area that are currently rented out.