05.27.09
Buy to Let Rates Should Be Lower Than Your Rental Income
The buy to let rates you find on the market for properties you intend to invest in are quite different from the residential mortgage rates. The first major difference you see between the two is that residential mortgage lenders look at your income before sanctioning the mortgage deal to you.
In the case of a buy to let mortgage, the mortgage lender will take a look at the rental income you will be able to generate from the property. If they find that the rental income you could receive is sufficient for covering the mortgage interest payments by a minimum of 120 – 130%, then the lender will be more than happy to sanction the buy to let mortgage to you.
It is interesting to note that buy to let deals are usually sanctioned on an interest only basis, and may charge high fees. Therefore, one shouldn’t forget to take these fees into consideration when budgeting for a buy to let investment.
There are other fees you have to pay the buy to let lender, which include a mortgage valuation fee. However, if you’re considering a remortgage of your existing deal, then the fees is paid for you by the lender. In such situations, you mainly have to worry or concentrate on the buy to let rates to make a decision on the buy to let deal.