Tag Archives: mortgages
All About Buy To Let Mortgages
The concept of buy to let mortgages has been something that became very popular during the 1990s and the early 2000s when the property market in the United Kingdom was rising steadily, almost on a month by month basis. Such mortgages are specifically designed for the buy to let market. These mortgages tend to be taken up mainly by amateur and professional landlords.
The idea of buy to let mortgages is that a person with some disposable income takes on a mortgage and then rents out the property to tenants. People who enter into this kind of financial transaction hope to make money by doing so. Often the landlord will get the assistance of a letting agent who will help with the whole process of finding tenants for the property and dealing with the management of the tenants.
People who go into buy to let mortgages hope that the value of their property rises over time. In good economic times the landlord may be able to increase the rent of their property. The best time to do this is often when a tenant moves out. The landlord can then consider charging more rent to a new tenant when the economy is in good shape. A good economy will mean that there is more money available for people to earn, and that landlords can charge more rent to tenants of residential properties. There are tax advantages to landlords who enter into such mortgages that work on a buy to let basis.
Buy to let mortgages can be a good idea in a good economy when there is less chance of tenants being unable to pay the rent. This will mean that residential landlords get regular rental payments over time. In a good economy the value of the residential property will go up over time as well. This will mean that if the landlord sells the property some years later after house prices have risen steadily, then there is a good chance that the landlord will make a profit.
Buy to let mortgages are of course very popular when mortgages are readily available. A ready supply of mortgages often happens when the property market and the stock market are rising, and when the financial system is in good health. Lenders offer mortgages for buy to let landlords in different ways. Some lenders base the amount that they will lend on the landlord’s salary and their existing financial commitments.
One of the drawbacks of buy to let mortgages is the amount of property maintenance that may be needed. This maintenance expenditure could be hundreds or even thousands of pounds over a year. This is the kind of money that may be needed to be spent on the upkeep of the rental property. Such expenditure may erode the profit that is made from the rent received from the tenants. Another drawback is void periods, these are the periods of time when there are no tenants in the property and therefore no rent is being received by the landlord.
How Parents Can Find The Best Secured Loans Deal To Help Their Children Get A Home Loan
With the property market heating up, there has never been more pressure for first time homebuyers to purchase their own homes. Interest rates are at record lows and competition between buyers is driving up property values. As such, people who have never had a home before should seriously consider buying now. For many first time homebuyers, however, buying a home is difficult, especially if they don’t have a very large deposit to put towards their home loans. Not surprisingly many parents are choosing to help their children buy a home through a number of different ways. Many parents are in a good position to help their children with their first home, but deciding what form that help takes can be difficult. This article will look at what parents can do in order to get their children on the property market sooner rather than later.
Lend Money
The simplest way parents can help out their children is simply by lending them money. This form of lending would usually take the form of a personal agreement between the parents and their children, so it is entirely up to both parties to negotiate a repayment schedule and interest rates. Because the size of a deposit has such a big impact on the interest rates homebuyers will pay for their mortgage, a little boost at the beginning can lead to big savings over time. Although government schemes like Help to Buy have made it much easier for homebuyers to put up deposits of just 5% and still get approved, it is important to realize that these small deposit mortgages will still suffer from some of the highest interest rates on the market. Of course, for personal lending to really be a help, the parents would have to charge less interest than what banks and other lenders currently offer for similar sums.
Using an Existing Home as Collateral
If parents don’t have the money sitting in their bank accounts to simply lend to their children, they can still raise funds in other ways. Since many parents will have a great deal of equity in their homes, getting approved for the best secured loans deal should be fairly easy so long as other factors, like income and credit histories, are taken into account. With this type of lending, the parents would use their own home as collateral when they borrow money from a bank or building society. Because the home acts as a guarantee that the money will be repaid, lenders are likely to offer much lower interest rates due to the lower risk they are taking upon themselves. Parents could then use the money they raise in this fashion to help their children either raise a deposit or to simply help make monthly mortgage payments. However, parents need to be aware that this route is risky as they could have their own home repossessed if they default.
Joint Mortgage
Another way parents can use the equity in their own property to help their children buy their first home is by applying for a joint mortgage with the children. Joint mortgages are usually easier to get since the financial status and credit history of both the parent and the child will be taken into consideration. Therefore, the mortgage is much more likely to be repaid so the bank looks at these arrangements as being far less risky to its own business. As such, joint mortgages usually come with better interest rates than traditional mortgages, especially if the parent uses his own property as collateral. With a joint mortgage, however, both the parent and child will have ownership in the new property, meaning both members are responsible for repayment. Again, if an existing home is put up as collateral then the parent risks that home being repossessed if he and the child cannot keep up with the mortgage payments.
Getting onto the property ladder is notoriously difficult, which is why so many parents are choosing to help their children raise the necessary funds for a mortgage deposit. Parents can help in a number of ways, through a personal loan or by using their own homes as collateral, but whichever route they choose they must make sure they are agreeing to terms that will place both themselves and their children in a strong financial position in the years to come.