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General, Guides
A Complete Guide to Buy-to-Let Mortgages
A Complete Guide to Buy-to-Let Mortgages If you want to become a landlord or develop a property portfolio, you’re likely to need a buy-to-let mortgage. These specialist mortgage deals are different to standard mortgages – and it’s important to understand the key differences. Here’s a useful guide to help you. Buy-to-Let Mortgages – What Are They? If you’re intending to buy a property with a view to letting it out, you’ll need a specialist mortgage. In fact, it’s illegal to purchase a property with a standard mortgage if you intend to generate an income from it – so it’s important to let your mortgage lender know exactly what your plans are. A buy-to-let mortgage is often only available for people who already own a property, and who have a good credit rating. Exact policies differ, but generally speaking, a mortgage provider will also expect to see evidence that you earn £25,000 or more per annum. How Are They Different? Buy-to-let mortgages don’t differ that much to ordinary mortgages; and getting to grips with them shouldn’t be too tricky. However, here’s a few key differences that you need to be aware of. Interest-only. The vast majority of buy-to-let mortgages are interest-only. That means, with each monthly repayment, you’re not paying off any of the capital, only the interest owed against the loan. What are the implications? At the end of the mortgage term, you will need to repay the capital – so you’ll need to have your finances in order by then. Interest rates. Interest rates are often higher than standard mortgages, and you’ll need to factor this in when you make a purchase. Higher deposit. As a buy-to-let property purchase is effectively a business move, the minimum deposit required is often higher than with standard house purchases. On average, expect to pay 25% of the property’s value. Specialist fees. Most buy-to-let mortgages also incur specialist fees, which are more expensive than standard mortgage fees. What Can You Borrow? When you apply for a buy-to-let mortgage, your provider will want to know more information about the purchase and the potential rental yield. This is so they can establish how much they can safely lend you. You can get a good idea about how much you can borrow by working out your rental income. The maximum amount you’ll be loaned is directly linked to the rental yield you can expect to generate. If you’re not sure what this is, ask letting agents in the local area, or check online to see what similar properties are making. Typically, your rental income needs to be at least 25% higher than your monthly mortgage payments. Important Things to be Aware Of Like any form of borrowing, buy-to-let mortgages come with risks attached. It’s important not to rely on the sale of the property to repay your mortgage, as property prices are volatile and your house may decrease in value – meaning you’ll have to find the remainder of the money owed from somewhere else. Unlike other financial products, if something goes wrong, it’s unlikely that you’ll be covered by any consumer protection – so it’s important to make sure your finances are all in order before proceeding with the purchase.
General, News, Properties
Property Prices in Scotland are Falling – And Sales Remain High
Property Prices in Scotland are Falling – And Sales Remain High In a significant contrast to the previous year, house prices in Scotland have fallen by 8.4%, to just £159,198. However, demand for Scottish properties hasn’t been this strong in many years. A total of 19,802 homes were sold from January to March – the […]
General
Walking 500 miles is nothing – Scots parents are going further for their kids education
Walking 500 miles is nothing – Scots parents are going further for their kids education Being a parent is not cheap, this isn’t news and the premise of Santander Mortgage’s recently published research won’t surprise readers, but the figures it reveals might. Findings highlight exactly how valuable the right school has become, and what it’s […]
General
Guide to starting in property development at the bottom
Guide to starting in property development at the bottom The rise in property prices mean it’s the ideal time to start on the property developer ladder. If you have capital to invest and harbour dreams of becoming a property developer there is no time like the present. Opportunities for affordable investment and development are available, […]
General, Investment
The Scottish Property Recovery
The Scottish Property Recovery There is a renewed air of positivity around the Scottish property market and it’s not simply summer optimism, there are hard stats to back it up. Here we share recent reports that illustrate the extent of the Scottish property market’s recovery and explain what it all means. The Registers of […]
General
General Election Ahead – Key Housing Policies Explained
General Election Ahead – Key Housing Policies Explained With the general election less than one hundred days away, MP’s proposals to tackle the housing crisis in the UK will be a key area of debate. Part of their proposals will be what they plan to do to build more homes, which will of course mean more […]
General
Demolishing The Red Road Flats, A Celebration Or An Insult?
Demolishing The Red Road Flats, A Celebration Or An Insult? At Cairn we like to keep our finger on the pulse of all that’s happening in the property industry, whether it be buying, letting, or investing. However we also keep a close eye on what’s going on close to home, and there’s one story in […]
General, Services
Beat The Winter Blues
Beat The Winter Blues The days have begun to get shorter, the nights longer, leaves are falling off the trees, and there’s a distinct nip in the air; it can mean only one thing, winter is on its way. With autumn just begun, we thought this was a perfect time to give you some […]
General
The Help to Buy Scheme: The Ins and Outs
The Help to Buy Scheme: The Ins and Outs It’ll be something you’ve seen plastered all over the news, the new government ‘help to buy’ scheme (Scotland). But exactly, what is it, and how does it work? Since the collapse of the economy in 2007, the housing market has been a huge casualty, with […]
