Not so long ago, buy to let mortgages were inflexible and choice was restricted, making them unattractive to anybody apart from professional landlords.
In the last decade the buy to let market has changed dramatically. Growing property prices, tenant demand for a good quality rental accommodation and turbulent stock market events have attracted many people to acquire properties for investment purposes.
Lenders were quick to realise that there was a niche for a buy to let mortgage product that will enable the average borrower to buy a property with an intention to rent it out.
Buy to let mortgages are specifically designed for landlords.
One of the main requirements of the mortgage is that rental income received will be sufficient enough to cover mortgage payments. Moreover, in the majority of cases, lenders are expecting that the rent will be covering monthly mortgage payments by at least 130% as in addition to mortgage payments landlords are expected to pay for a buy to let insurance, and in many cases letting agent charges.
In addition to that, prospective borrowers will be expected to demonstrate their ability to take over the repayments in the event of their property being empty and are quite often expected to earn at least £18,000 to £20,000 a year, with some lenders looking for as much as £35,000.
Another condition that lenders are likely to request is for the property to be rented on a Shorthold Tenancy Agreement and have an appropriate buy to let insurance.
In the last couple of years, best buy to let mortgage rates have become comparable with residential mortgage products and the number of buy to let products has increased significantly.
Without a doubt the buy to let market has been affected by the financial crisis, but despite the effects of the credit crunch, it is still possible to find a number of good products.