As uncertainty continues in the UK housing market and sale remain at low levels, the demand for rentals continues to increase and the buy to let market has become an increasingly popular investment choice to consider.
If you are looking to become more involved in the property investment world, it’s a good idea to start building a strong portfolio of buy to let properties. If you choose to create a diverse portfolio, you will be more likely to have your rental incomes balance out. Even if you have some properties that aren’t bringing in much money, you may have more success with other properties. This is also a good way to be more cost-effective.
You may already have a rental property, but it’s a good idea to build a portfolio that includes more property opportunities. In order to get more properties, you will need to put forth some capital. If you have an existing property one way to raise the capital required is by releasing some of the equity that has been built up in one of your existing properties. Releasing the equity will allow you to continue to build your portfolio.
In order to take advantage of this opportunity, you can remortgage your first rental property or even the property you live in. This will allow you to release the equity so that you can use it for your benefit to secure the new buy to let mortgage. You can continue to do this as you build your portfolio with each new rental property. However, you need to do is wait for each property to appreciate in value or until you have repaid a sufficient amount off the mortgage. With current loan to value ratios as about 75%, you will only need to make a deposit of around 15-25% of the purchase price.
In order to get the best results possible, you will need to take extra care when selecting your properties. You will want to choose properties that are affordable and have the ability for good capital growth. You will also want to select properties that have a high tenant demand to avoid the voids. Your lender will be interested in the rental potential that the property has. You want a property that will allow you to have the most minimal void periods, because this will require you to pay less money for the cost of the mortgage payments.
In order to get a loan, you will need to take extra steps if you’re self-employed. You will need to take advantage of a self-certification buy to let mortgage, which is based on the rental income amount. The rental should normally fall in the range of 130% of the annual interest payments. Because of popularity and competition, some lenders may accept a 100% ratio.
If you already have a good property portfolio, you will be able to work with a mortgage lender who specializes in lending to landlords with multiple buy to let properties. You will find that most lenders have a maximum amount of money that can be lent for each property. There are also maximum amounts of money that can be lent to an individual buyer.
If you choose to work with mortgage brokers, you may be able to benefit by taking advantage of the ability to take a borrowing limit across your properties. For example, your properties may have a certain overall value and you’re able to set a loan facility rate of 80%; If you’ve only chosen to borrow 70% so far, you still have room to borrow quickly and take advantage of a great opportunity.
Once you continue to have success and build your rental property portfolio, you will be able to look for interest-only mortgages. This can help to lower your monthly payments and is also a good way to raise the finance required to secure your next property.