Best Buy to Let Mortgage Calculators
Want to increase your profits as a landlord? Learn how by finding the best buy to let mortgages. And whilst the Bank of England base rate is retained at just 4.5%, now is nevertheless a very good time to be considering character investment or simply refinancing any buy to let similarities you already have to release equity for future purchases.
It would be easy to start saying just how easy it is to become a landlord and earn income from UK investment character and how you can simply sit back and watch the profit tumble in like a cascading waterfall. The reality is that there are a number of meaningful issues that you will have to be involved in to ensure your investment character portfolio works to its optimum. With tenants to source and vet, an investment character to continue, buy to let mortgages to position, letting agents to manage and accounts to monitor, it does take a certain level of commitment. So if you are nevertheless keen to have a slice of the much talked about character game then you will want to read on to find out how to get started?
character MARKET 2006
Despite the negative press that the housing market experienced at the beginning of 2005, there are a number of reports circulating that suggest that figures have shown an increase towards the end of the year. This is of course good news at the end of what some expected would be quite a difficult year in the housing market. There is of course the question of what will happen in 2006 and the character market. It is never a precise prediction as there can be many influencing factors but what we do know for certain is that over the last few months we have seen interest rates stabilize and character pricing stablising as a consequence of this.
So does that average we should avoid investing in character until the market starts to increase again. In some respects many people might suggest that investing in character at any time is a good investment. When you consider that historically character has doubled in value, and sometimes tripled in value, every last 10-15 years, then it is likely to see you a good return on your investment if you are prepared to take a long term view. Plus, there nevertheless remains a high level of activity from Landlords and investors alike with a number of buy to let mortgage providers suggesting record levels of applications being received. For those looking for a get high quick overnight scheme, then this is not for you. But when you consider the long term gains, it might be worth reading on and dont forget that it is worth doing plenty of research and finding out as much as you can about investing in character. Perhaps pick up a Free Buy to Let Guide.
How to make £166,500 in 15 years
According to research from the Centre for Economics and Business Research (CEBR), the average cost of a home in the UK could be £300,000 by the year 2020. Currently that figure stands at around £157,000 in 2005 which represents an increase over the next 15 years of 91%.
This figure of £300,000 is achieved by the economic forecaster basing its prediction on the ever increasing population compared to a slower production of house building. As with many commodities, it is the consequence of lower supply and higher need that will push up these prices.
With buy to let residential investment character, the maximum loan you can apply for is 85%. Based on an average value character in 2005 of £157,000 this would require you to put down a place of 15% £23,550 unprotected to valuation and rental cover which can vary between 115% to 130% in most situations.
Potentially over the next 15 years, this one investment could realize a return of £166,550. This is based on selling the character at £300,000 less the loan of 85% of the character value in 2005.
Over past years there have been times when character has declined in value and other times where it has signifcantly increased in value but a good character investor will clearly see the benefits in both a rising and declining market and will utilize the facilities of a good buy to let mortgage provider to assist in this. For example:
During a rising market, a character investor may decide to use this window of opportunity to release some of that equity realized in the value of the character, to use for additional character investment. However, the character investor is less likely to use that capital released during a rising market. Instead, the landlord will wait until the market has re-stablised itself or experiencing a decline. At this point, they will then use this window of opportunity to buy lower priced character and the time of action continues. That is why character investors are in it for the long term and why they see the market as being profitable to them in all conditions. And when you consider that character prices only need to increase by an average of 4.4% year on year, it is easy to see why this kind of investment is so achievable.
Successful character investors will do a lot of research on areas that they believe will become character hotspots and areas which are less likely to perform. There are many areas experiencing high levels of growth and financial investment with a lot of regeneration programmes in place or planned in the future. already by simply monitoring publications such as Construction News can give a good indication of where new commercial premises are being built which can be a good indicator of new businesses moving to the area which it turn can rule to an increase in need for character locally.
It is the general consensus that interest rates have stablised and there is already speculation of a drop but either way, they have been steady for a good number of months now. Slower capital growth does consequence in buyers having to put more effort into managing and developing their portfolios. And more importantly making a profit from character. Buying character at discounted prices can be done but you must do your homework to make sure they are genuine discounts and incentives. And dont forget that in a slowing market, vendors will be more likely to listen to your offers. Albeit if they are a bit cheeky. In particular, you can use the negative press that is often surrounded by the character market to your advantage. For example when the media are circulating stories of a dropping character market, then vendors are already more keen to listen to your offers.
How to Get Started in Buy to Let
o Do as much research as you can. You can already get some free publications including Free Buy to Let Guides
o Find out what similarities are selling for. A good way of doing this is by contacting estate agents and researching on the internet. A good way is to look at character house price websites.
o What is the level of need for rental similarities in the area
o What kind of character is most in need. For example, if it is a university city, then the need for shared student accommodation may be much higher than character for specialized sharers.
o Find out what rent is being achieved on those similarities and the likely time to get the character let out. Speak to letting agents and local businesses that may be letting similarities already in the area.
o Raising deposits for your investment similarities, may be easier than you think by releasing equity from any of your existing similarities.
So how Do you know if you have bought a good investment
Well there is always an component of risk but providing you follow the main logic you should eliminate most of them. It is also important to make sure you continue to review your buy to let mortgage funding on a regular basis as this can have a big impact on your success and cash flow. As we have said above, the character market can rise in addition as fall so providing that you have some cash funds in the bank to help you by any tougher market conditions then you could reap the rewards in years to come. But its important that you calculate these carefully into your projections to ensure that at any rate funding you may need to input into the investment character that it will be outweighed by the eventual gain.
Providing that you are buying a good quality character in a good area with strong rental need then its worth considering. Dont just buy a character because it is cheap. You might buy a character at a very discounted price, but if you cant let it, you could find yourself covering the buy to let mortgage payments for months to come which will see a big dent in your profits. Find out why it is cheap. Is there an increase in crime in the area, have plans been submitted for a large industrial unit to be built behind the garden etc, etc. Do your research. And dont be afraid to develop a character for profit. Buying at the right price, in the right area and doing the right renovation on the character, can also see you return a decent profit. Re-financing the character on completion and letting it out could give you the best of both worlds.
Having taken into account all the considerations above, to calculate if it is a good investment, you need to ensure that your annual rental income exceeds the cost of your monthly buy to let mortgage repayments and maintenance costs. And it is more likely that your annual rental income will be stronger if you select an investment character in area with a strong and growing rental need as it is less likely that you will experience rental voids and be supplementing the monthly buy to let repayments.
So in conclusion the character market is likely to keep a chief choice for character investors as long as they are will to commit to the long term.
Firstly, you need to establish if this is the right time for you to become a landlord and how much it is going to cost you. Can you provide to tie up money in a character? If the worst comes to the worst, can you provide to lose that money?
The simplest way to work out the repayments on a buy to let mortgage is to use an on-line buy to let mortgage calculator. These can help you work out the best buy to let mortgage product for the kind of UK investment character you are considering and your individual circumstances. You will need to know the likely rent that can be achieved for the character as this will determine the maximum loan amount obtainable against the buy price or refinancing value of the buy to let character. Lenders typically suggest that the rental income each month represents at the minimum 130 per cent of the monthly mortgage payment. Although there are some buy to let products calculated on ratios of as little as 115%. By working on these calculations, gives the investor a margin to cover the letting agents fees and other associated costs.
This is a long-term investment and you need to take the same approach to investing money into a house or flat as you would to buying into the stock market. Historically the value of similarities have doubled every 10-15 years but that doesnt average to say that there wont be peaks and troughs in between. These are times that you have to be prepared and most importantly can provide to ride by.
Increasing your returns by using buy to let finance to your advantage
For example, lets say you have £100,000 cash to invest into Investment character. Is it best to buy a character outright or use this money as deposits on multiple buy to let similarities?
Mr Jones – decides to use his £100,000 to buy a brand new character outright for cash. He lets the character for £600 per month giving a return of £7,200 per annum. Due to inflation, the rent will increase consequently and ultimately, after fluctuations in the character market, the house doubles in value.
Mr Smith – decides to use £100,000 as deposits (15% for each investment character) to buy £500,000 worth of similarities similar to the one Mr Jones bought. This results in Mr Smith receiving five times as much rental income, i.e. £3,000 per month or £36,000 per annum. The other £400,000 is borrowed on buy to let mortgages and Mr Smith pays interest on this at a rate of approximately 5%. These monthly interest only repayments would work out to be £20,000 per annum. consequently, net of interest they receive £16,000 per annum. Mr Smith is already better off than Mr Jones….. but what happens in years to come? Well it is probably safe to say that Mr Joness rental income will rise with inflation as per Mr Smith. However, Mr Smiths buy to let mortgage costs keep the same. consequently, the gap between Mr Jones and Mr Smiths rental income will continue to widen as time goes on. And finally after 10-15 years when character could have doubled again. Mr Jones would have made a capital gain of £100,000 and have £200,000 worth of investment character. while, Mr Smith would have made £500,000, which is five times as much capital gain!!
The most successful landlords will use some of the best buy to let mortages to fund their buy to lets and with buy to let mortgage products becoming more complex and competitive the right buy to let financing can ensure you continue your investment character portfolios in such a way that you are always working to the most optimum cashflow situation.
Best Buy to Let Mortgages
Finding the best buy to let mortgage is crucial to your success as a character investor. Unlike other forms of investment, a lot of the money you put into a buy to let character is likely to be borrowed. Over the last few years, the buy to let mortgage market has boomed, and borrowing money to invest in this way has become easier than ever. There are a number of different buy to let mortgage products obtainable from fixed rates, discounted variable rates, discounted rates and so on. Different products may be appropriate for different investment similarities. And dont be tempted to just go for the cheapest buy to let mortgage as there may be penalties that make it less attractive in the long term.
Always find out the best buy to let mortgage deals obtainable at the time. Some investors may decide to retain their complete portfolio with one lender, but its important to realize that different buy to let products between different lenders can provide you with maximum flexibility and cashlow depending on how you structure your funding.
However it is very important that you get the correct guidance with your buy to let finance. You will often find that buy to let mortgage brokers have access to numerous different products and lenders and some can already offer exclusive products that wouldnt necessarily be obtainable to you if you approached the buy to let lender directly.
Questions that are worth considering when finding the best buy to let mortgage:
1. Do they have access to lots of different products in the market place?
2. Do they have the ability to create a long term character development strategy for you?
3. Are they able to obtain Exclusive Products?
4. Are they able to position mortgages within 10 working days?
Most buy to let lenders will offer a maximum loan of 85% requiring you to fund at the minimum a 15% place towards your UK investment character. The buy to let mortgage industry is very competitive with new products being launched on a very regular basis.
Some buy to let mortgage brokers may charge a brokerage fee up to 2% to position the buy to let finance for you but dont let this put you off because if they do have the ability to obtain exclusive products for you, it could be very advantageous to your cashflow as a landlord. Plus, if they are able to reach formal mortgage offer stage in a very short space of time, this could consequence in you being able to obtain the investment character at very competitive prices if you have the ability to tell the vendor that you can have the deal completed within a matter of a few weeks.
How much you can borrow for the buy to let character will usually be worked out differently to how much you can borrow to buy your main home. Different lenders and different products carry different criteria for working out the maximum loans obtainable. Some will lend on how much you earn, others on the rental income you unprotected to from the investment character. And sometimes a combination of the two.
How much rent will you make?
Before you agree on the buy price of a buy to let character, it is important to find out from local letting agents, what the likely rent could be. They should be able to let you know which types of character are in highest need and which areas are the most sought after for tenants. If you need to find out whether your possible buy to let is looking like a good investment, ask your broker/lender to work out the provide (ie the money you are investing and the rental income you will receive) on the character against what your repayments are likely to be. I you are investing in an up and coming area, it could nevertheless be a viable investment despite the figures not looking too healthy today. If you believe that the area will be having a lot of other investment or new businesses moving in, then there is the possibility that the surrounding character market will have a positive knock on effect. When the valuation is carried out on the character, the surveyor who visits the character will also be expected to give an assessment of the expected rent in addition as the value of the character.
A local letting agent is the best person to approach for this kind of information – especially if you hint that you might let them be the characters management agent.