The Two Faces of Buy to Let Mortgage Borrowers

Have you been thinking about adding to your property portfolio? Then now is a good time to do it. The reason is that there has been an increasing demand for tenants and a rising number of bargain properties. Industry professionals report that there is a particularly strong demand for rental homes up to £700 a month. A good part of this demand is coming from would-be first-time homebuyers who do not have a deposit large enough to enable them to obtain a mortgage and purchase their own property.

Hometrack states that rental demand is also invigorated by young people in their twenties and thirties who do not have the financial means to make a property purchase. The property data company adds that even a sharp decline in property prices won't be enough to enable many people to enter the market. This is one of the factors that will help fuel the demand for rental properties for the next year and a half, at the least.

When buying a property to add to your portfolio, always aim buy well below market value (BMV) to ensure profits on the day of purchase. The best way to acquire BMV properties is to buy from motivated vendors on the lookout for a quick sale and are willing to sell their properties for lower than their market value. Some refer to market value as the price estate agents could realistically expect to accomplish within three months of marketing the property.

The darker side... and what you can do about it

Despite the positive news, the buy to let business in the UK has its own share of troubles. Due to the credit crunch, many landlords are experiencing difficulties with their buy to let mortgage repayments. In some areas, rental rates are either languishing or declining and property prices are expected to fall even more. However market experts reveal that the current situation is set to get better as interest rates continue to fall.

But for those landlords who are in danger of losing their rental properties to repossession, they may want to avail of a service that guarantees continued ownership of their property. With the help of prospective investors who will be providing the much needed funds, landlords will be able to keep up with their buy to let mortgage payments and subsequently keep their homes. In return for the financial assistance, the investors will receive a percentage of the profits from the monthly rentals. If the landlord fails to produce enough earnings, he won't be obliged to pay any of the payments to the investor. This particular scheme though is targeted to landlords who possess at least £5 million worth of residential properties.

If you're a new buy to let mortgage borrower you're probably faced with the dilemma of having no equity. Or, it could be that the rental income you're receiving falls short of your monthly mortgage payments. When stuck with this problem, you can always have a discussion with your lender. While they don't typically advertise the fact, lenders are often open to the idea of taking what you can give and making the necessary adjustments going forward.