BTL mortgages are a great opportunity to be creative in property investing. Just ask Peter J How, author of the book All About Buy to Let Mortgages.
He started out with £5,000 and 15 years later has 20 buy to lets and a property portfolio that worth £3 million. And it’s all been on the back of buy to let (BTL) mortgages.
He refused to go down the route of bridging finance, viewing it as too expensive. Instead, because the BTL mortgage was secured against a property, he was able to get a much better finance deal.
Here are some of his other tips, for property investors at all stages in their career:
Don’t leave mortgage choices to your broker
“No-one is more interested in your money than you,” says Peter, whose website is Buy-to-let-mortgages.org.uk.
“So, do your own research when it comes to choosing a BTL mortgage product. Yes, use a broker, but come prepared. Know how the property market is faring, and what the climate is like in the lending world. Try and work out where it’s heading too. Don’t wear a blindfold and leave it to your broker. In other words, do your research.”
He goes on to say that a fixed rate for five years is ideal right at this moment in time when interest rates are so low that it’s hard for them to fall any lower. In fact, they’re more likely to go up at some point.
Meanwhile, by having a good understanding of the mortgage market, you are able to stimulate your broker during conversation, making them work harder for you.
Give valuers a property information pack
Make sure, when you meet up with a valuer who is about to look over your property, that you give them plenty of details. This should include what comparable properties in the area are renting for and what the sale prices were. You want to reflect the fact that there is a good demand for properties to rent, and that rents are healthy too.
By presenting them with the facts and having a discussion, you are preventing a valuer making any mistakes with your property, says Peter.
“Usually, they are pleased to have it all worked out for them,” he adds. “Valuers are busy people after all. You’re guiding them. Yes, they have to rubberstamp it, but the majority of valuers will simply check and see if the figure stands up, rather than look for something to dispute it.”
There is also a range of valuations, Peter adds, and you are looking to get the highest permissible valuation. Getting to know valuers and being trusted by them to come up with the right figures in the first place, certainly helps on that score.
Lay out your vision for a property
Decide what you are going to do with a property from the start. This will help when it comes to choosing the particular BTL mortgage that’s best for your goals. That’s because some BTL mortgages won’t let you change the use of your property or even your tenant types. To go ahead with your plans to change you have to re-mortgage, meaning solicitor fees etc.
So, make sure to check the small print (or the mortgage ‘terms and conditions’). If you don’t have time to do it, then get your broker to do it for you.
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