The Concept of Buy To Let Mortgage
June 16, 2007 – 8:40 amIf you recall, I have a friend who is acquiring property like it’s a game of Monopoly. He told me about a new concept that he is experimenting with, called buy-to-let mortgage, which means that he takes out a mortgage to acquire a property with the sole intention of renting it out.
I think that is a great concept since he already has extra homes and can’t be living in them all at the same time so why not rent them out. His tenants could then be servicing his mortgage loan so it’s a win-win situation to the benefit of both parties.
Paul told me that since he is new to this as well, he will need to research on the available buy to let mortgages first and talk to people in the industry so as to find out the best properties to invest in for this purpose.
Paul said that first criteria to qualify for a buy to let mortgage is that the rental income has to be more than at least 1.3 times the mortgage interest to even be considered. This really makes sense. Paul would have to do his homework well and get some calculation done but I am sure he will manage to get something that matches!
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