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Fixed or Discount - When buy to let was first established it was only landlords with large portfolios that did the buying. Nowadays landlords include those with only one or two properties. The long-term buy to let offers a good return if the property is in the right place. This is why it is important to choose the right area and of course choosing the right mortgage so that the whole deal will give the best returns.
The main choice of mortgage deal for buy to let is either tracker, discount or a fixed rate mortgage. The fixed rate will remain the same with constant monthly repayments regardless of the base interest rate. A tracker or discount deal will follow the base rate and fluctuate accordingly. The advantage of the fixed mortgage is that the rent can be set and finances budgeted for, as the monthly repayments are known. With a tracker it is more difficult to balance finances as the repayments with rise and fall with the base rate.
Many new landlords choose a fixed rate mortgage so they can budget accordingly but as these are also fixed for a period of time it is necessary to keep the property for a few years.
The amount able to be borrowed will depend on such factors as how much deposit is to be paid and whether any other properties are in the borrowers portfolio.
With the market buoyant around 12% of landlords are increasing their portfolios and this likely to remain so with more student and immigrants always needing accommodation.
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