Hi Kayla here,
Do you see your house as an investment, a pension pot or simply somewhere nice to live? The fact is that when you buy a property, it can be all three of these things. And if you’re purchasing a property as a buy-to-let to rent out to others, it’s also a business tool as a means of earning you a regular income.
When you’re looking for a loan to buy a property with, it’s important to know your main purpose for buying the home, even though your purchase will ultimately hopefully be a great investment towards your pension pot and also a lovely place to live, either for yourself or your potential renters. There are many different loans and mortgages out there to suit your plans for buying a property, and to help clarify which loan or mortgage is right for you in your individual circumstances, you could go to an independent mortgage broker or advisor.
Finance to Suit You
An independent mortgage advisor will have access to a wide selection of financial products that you’re eligible for, and they can explain all the options suitable to your situation, and help you choose and apply for the right one.
Russell Sanders from independent mortgage broker Fresh Mortgages, based in Berkhamsted, Hertfordshire, explains how a mortgage advisor can guide you to the best mortgage for your purpose. “Sometimes when people come to me to find a home loan, they themselves are not clear on why they want to make the purchase,” Russell says. “For example, if someone’s looking for a buy-to-let mortgage, they also want to make a wise financial investment on a property that they may decide to live in one day, or they may sell to augment their pension earnings.”
Maximum Property Investment
“In some ways, the ultimate reason for the purchase may not be clear now, but if it’s an additional purchase to add to a portfolio where the buyer already owns one or more properties, then a buy-to-let mortgage is highly likely to be the financial product that they’re after,” Russell continues. “Even if the new property will ultimately become the purchaser’s home, which could be the motivation for someone who, say, already lives in a house but then buys a smaller flat that they may move into in 10 years’ time, the buyer still wants maximum return on investment with an affordable mortgage.”
Fresh Mortgages has seen an increase in recent years of buyers who live mortgage-free in an existing property looking for a mortgage with which they can buy a house or flat to rent out, so they receive the rental income while the property rises in value. “Many people see that interest rates on savings are so low that money invested into a property, rather than a savings account, is much more financially rewarding. The rent they receive far outweighs the income in savings interest that they would get.”
Growing Buy-to-Let Mortgage Demand
So the demand for buy-to-let mortgages has increased significantly in the last five years or so? “Yes,” agrees Russell. “Another contributing reason is the uneasiness a lot of people feel over the pension income they will eventually receive when they finish working. Most feel it will be inadequate for their future retirement, and by buying an additional property, they have at least that as a pension income, or lump sum, which will be worth a lot more than its original price.”
Is it easier to get a buy-to-let mortgage than a mortgage for buying a new home, whether it’s first-time buying or not? “It’s easier to borrow using an existing owned property, so that would cover most situations, apart from first-time buyers,” Russell says. “Having said that,” he continues, “there are a lot more incentives available now for first-time buyers, such as the ‘help to buy’ ISAs, which give higher interest rates than other ISAs, and a tax-free sum added to the account when it’s used to pay for a home deposit.”
Saving Time and Effort in the Mortgage Search
So to finish, I ask Russell what the main advantage of using an independent mortgage advisor are. “I can look at your individual situation, such as income, employment status and age, and find the mortgage providers with the best deals for you. So if you’re self-employed, or older than the average home buyer, I know the lenders who have products to suit you, and can approach them on your behalf. This saves a lot of time and effort on your behalf, especially when you may feel that your situation is so unusual that you’ll never easily find a mortgage provider who would lend to you,” Russell replies.
So when buying a property is complicated enough, so complex that you may not even clearly know your own reasons for doing it, going to an independent mortgage advisor will save you precious time and take away the arduous process of approaching multiple lenders to finally find one that will accept you, or one that offers the best rates available in the mortgage market.
Go to the Fresh Mortgages website at http://www.freshmortgages-uk.com/ to learn more.