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© KA Homes 2007 |
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Most buy-to-let mortgages require a minimum of 15% deposit and are usually based on the rental income of the property, not the income of the investor. It is prudent to ensure that rental income represents between 125% and 150% of mortgage repayments, and indeed some lenders insist on this. Typical interest on a variable rate buy-to-let mortgage is currently around 5.5%. However, rising property values and an increasingly saturated market, particularly in the London area, mean that returns from such an investment are less attractive than they were. The Association of Residential Letting Agents (ARLA) expects that the private rental sector will grow from its current level of around 11% of the housing market up to 20% by the year 2020. |
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One reason for this is the increase in the number of single persons and single-parent families wanting rented accommodation. ARLA further suggests that with people living longer, with less predictable income flows, there will also be a trend for them to rent in the later part of their adult lives. |
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Buying To Let As An Investment |
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