Tips for Buy-to-let investors to Plan Mortgage Carefully
There are tips from experts on how to optimise the property investment in 2014 to improve the returns on the buy-to-let market. The market largely belongs to those with good money to raise a deposit.
Areas of Caution
But the investors have to be cautious about abrupt changes. The interest rates may change and will not remain constant forever. Investors who bought property in the boom period before 2007 struggled when mortgage rates started rising. Interest rates will rise again.
The combination of appreciating property; lower house prices; soaring rents and scope for mortgage deals might be exciting. But certain essential things have to be borne in mind for a successful buy-to-let investment
Know the market: Buy-to-let has no explicit guarantees. So, gain a good knowledge of the market and understands its risks as well as benefits. The money being locked in a buy-to-let investment may perform better elsewhere. Even the high-rate savings can beat most investments.
Choose a promising area: Choose a promising place where people like to live for a variety of reasons. It has to be an area with good transport where good schools are available for young families. These questions picture the frame of a successful buy-to-let investment
Assess Liability: Buy-to-let lenders want rent to cover 125 percent of the mortgage repayments and demand 25 percent deposits or larger for rates above residential mortgage deals. When the mortgage rate and likely rent are clear decide on the investment size.
Target tenant: Evaluate your property from the point of the target tenant. The may be students, professionals, families needing rental accommodation. Family tenants will stay longer which is good news for a landlord.
Insurance: Take out an insurance policy to offset the possibility of your tenant failing to pay the rent usually known as rent guarantee insurance.
If you are buying with a mortgage rent-to-property price yield will not be the return you get. To get annual return on investment subtract the annual mortgage cost from annual rent and make it a percentage of the deposit you put down. Then factor in the tax, maintenance costs and landlord expenses. With the days of double-digit house price rises having gone experts are advising investing for income.
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