With the increased disparity between income and expenditure, there has been a growing urge to earn more. Investment in properties has come up as a unique option especially with the understanding that what you investment here keeps appreciating in terms of value and at the same time, you can get an instant income from the property too. Besides, it helps you get some tax rebate on your taxable income. However, such a tax rebate is purely governed by the laws of the land.
Therefore, buy to let mortgages have been very popular in the cities around the world. This, in turn, has also necessitated the advice on buy to let mortgages. After all, knowledge is strength to you!
Why buy to let mortgages:
Buy to let mortgages may refer to anyone who buys a property with the sole purpose of renting it out to a third party or organisation. Therefore, this concept grossly applies to the landlords. When you take a mortgage loan, you are to pay interest on the loan amount and to keep the property on a mortgage. In other words, the EMI (equated monthly instalment) that you pay to the loan disbursing company includes a portion of the principal loan amount and the rest is interest.
Based on the interest rate at which you took the loan, you EMI amount may increase or decrease on a monthly basis. This, in turn, takes a huge toll on your monthly budget. Hence, you need a second income that you can easily generate through renting the property. However, the best part of buying to let mortgages is that if you are lucky, you can cover up your EMI amount from the tenant’s rent.
Who can get buy to let mortgages?
- Yearly income: Different financial institutions may have different rules governing the minimum yearly income with a view to qualifying for a buy to let mortgage. Again, the income criteria keep changing with respect to the country of your location. If you are in UK, your minimum salary then must be more than £ 25,000 per year. Failing this, your loan application is most likely to get rejected by the lenders in UK.
- Credit score: Your credit worthiness counts when you apply for a mortgage loan.
- Age bar: The upper age limit for a mortgage loan is between 70 to 75 years max.
- Own home: Unless you have a home in UK, buying the second home there on a mortgage would be extremely difficult for you to manage.
- Willingness to investment: You should have the desire of creating assets.
- Comfortable to risk: You must be comfortable to risk taking.
All those put together means you actually creating an asset for yourself and the value of it is appreciating with the time. Interestingly, you are not incurring any expense for the purpose other than the initial advance money (somewhere close to 20% of the purchase value and the registration cost of the property). It is like creating an asset with a minimum investment and a guaranteed high return over the years. The advice on buy to let mortgages thus hold a special place here.