While many people don’t necessarily think of their mortgage as a business contract, in the case of raising a rent-to-buy mortgage, the main motivation is usually primarily based on receiving a greater return from an investment than the banks may be able to currently offer.
With interest rates remaining low, a rental income from a property bought with a buy-to-let mortgage can give a healthy monthly supplemental return.
Also an increasing number of people these days feel that they do not have enough potential pension investment to cover the years when they won’t be able to work anymore, so owning rental property can be seen as a pension pot for continuing income in those years, or an asset that will rise in value so that it can hopefully be sold off at a massive profit.
Finance Through Your Home
While getting a buy-to-let mortgage sounds like a great idea in theory but may not be that straightforward in reality when you apply for the loan.
Successfully applying for a mortgage is much more difficult now than it used to be, and a mortgage applicant who, for example, owns their own property outright mortgage-free may find that it’s harder than they first thought to get finance based on their existing home.
Mortgage providers may also want proof of a regular income, and may discriminate against self-employed people or those who own their own business. Even with a steady permanent job, if you’re an older applicant then mortgage providers may only offer a restricted repayment period, of say 5 or 10 years, leading to higher more punishing monthly repayments.
Avoid Wasting Time
Finding a provider that is sympathetic with your current situation can lead to several of your applications being refused, or mortgage offers that are undesirable because they give you less than you need, with more expensive repayments. And if you need to move quickly to secure that perfect rental property, problems with your mortgage application could cause you to lose that perfect nest-egg pension pot. And if you lose out repeatedly, you will be wasting precious money, energy and time.
An independent mortgage broker or adviser can assess your situation quickly and easily and approach only those banks or building societies that have a proven track record in giving loans to applicants such as yourself.
Learn more about the role of a mortgage adviser in the above video
Get That Loan
Russell Saunders, a mortgage adviser working in Hertfordshire and London for Fresh Mortgages, is an expert in helping people from all walks of life and all ages to secure a loan against their existing property so that they can invest in another property, whether for rental income or as a holiday home. Even if you still have a mortgage to repay on your home, Fresh Mortgages can find providers who will help you re-mortgage your property and raise a lump sum using your property as equity.
“I’ve received a lot of requests in recent years from people who want to raise some extra cash from the value in their home,” says Russell. “It’s a very popular way to afford that place in the sun, which can generate rental income, or to buy a property solely to rent out, giving them enough income to cover the resulting mortgage repayments.”
So how can Russell help someone to get a buy-to-let mortgage? “If you haven’t applied for a mortgage in years, or are self-employed, and unsure of your current eligibility,” he replies, “I’d recommend that to save time and effort, go to a mortgage broker for advice first.”
So Russell, is it all about who you, as a mortgage adviser, know?
“I have many years’ experience in working with mortgage providers and matching the right one with the right applicant,” he replies. “For example, if a couple, an individual or a family have been repeatedly turned down for any mortgage in the past, I know of mortgage providers that may not be well-known or on the high street but that will be open to assessing the applicant’s situation, and who are likely to come up with an offer where others have said no.”
So his message is clear. Buy-to-let mortgages can be a great way to raise an income and to strengthen your financial future, and to find the best deals for your unique situation, go to a mortgage broker or adviser first.