In residential mortgages, there are two categories. There are those who a acquire the house and live in it and there also those acquire the house to let t out to other people who will in turn pay rent as the end of the month. The owner of the house expects that through the rent he/she will be getting from the monthly rent, he/she will be able to pay for the mortgage’s monthly rate and eventually clear of the whole amount and become the full owner of the premises. This might actually be confused with the commercial mortgage because one might think that since the owner is renting it out, then that makes it a commercial property.
That is really not the case. It still remains a residential mortgage, just that the owner is not the one residing in it. Unfortunately, this kind of business has not been a profitable venture to many who opt for it. It used to be a profitable business back then but now the changing real estate market has overturned the situation.
Buy to let mortgages are different from the residential mortgages in a number of ways. Apart from the earlier mentioned, that the owner is not the one residing on it, there is also another difference which is the amount of deposit that is paid to secure the mortgage is basically different. When you are in the process of securing your mortgage, the mortgage providers will want to know whether the residential property you are acquiring will be for you to stay or for you to let out.
If it’s the later, then you will be required to pay much more deposit as opposed to going for a residential house which you will actually stay in. There are other factors that the lenders will also look into before they can be able to give you this kind of great commercial mortgage. They have to be convinced that the rent you will be getting from the premises is at least 125% of the monthly amount you are supposed to repay. They need to be convinced that indeed you will have not only the willingness, but also the ability to pay the monthly rate of the mortgage: that the house can offset that monthly rate without injecting any other money from outside.
For that reason, it is of great importance that one considers using the services of a buy to let broker, who will able to assist you push through successfully with your plan. This is because these are professionals who are “players” in this business and therefore have the ability to advice on what is really going to be of benefit to you or not. They are well informed about the real estate market and that is what you really need to have on your side when you are making the choice of acquiring a residential house to let.
You might even be lucky enough to land on some special deal information through these brokers. You surely just don’t want the house to be able to pay the monthly mortgage rate, it is more than that. It is definitely your goal that the house can be able to pay the monthly rate and also be able to raise some income in the process so that you can be able to take care of the maintenance of the house and other recurrent costs without injecting in money from other sources. In simple terms, it has to be self-sufficient. Otherwise, you will be zero grazing.
The worst case scenario is when you need to actually deep into your pockets to take care of the recurrent expenditures of the house you acquired. Before thee mortgage actually goes through, it is important to find out the amount you are supposed to pay. This is the initial amount to be deposited. It must be an amount that you are willing and in a position to pay without stretching your financial muscle too far. You also need of conscious of the period you will be required to complete the payment of the mortgage so that you make viable plan to cater for the monthly payment of the mortgage. Long term holding is bound to give you greater benefits as opposed to short term holdings.