If you are a private landlord, a buy to let mortgage can provide you with a wealth of opportunity for long-term capital growth. Here are the main differences between buy to let mortgages. First is rental potential, this is factored in when you apply for the mortgage. Your income may or may not be considered as additional funding for the mortgage.
Interest rates are usually higher with buy to let mortgages and finally a larger deposit is usually required as much as twenty to twenty five percent of the property’s value.
There are some pitfalls to buy to let mortgages; the purpose of these mortgages is to obtain property in order to let it out to a tenant. If property values drop, if you are unable to find someone then it can become a significant financial burden and this type of investment does take more effort than other forms. However, it does have the potential for long-term rewards that can make it well worth the initial risk.
There are two things to consider in buy to let properties, either they are for income, or month to month results or capital growth, meaning equity this can be a deciding factor in location and type of property.