Buy to Let Mortgages - Cheap Mortgage Deals

The Buy to Let mortgage market has seen a huge increase in popularity over the past 10 years. There are varying reasons as to why people enter into the market. The majority of investors see the market as an opening to a long term investment opportunity and stay in the market for at least 10 years, most investors see their property's value as being incremental and worth hanging onto.

According to a survey carried out on behalf of Birmingham and Midshires, 71% of all buyers would like to add properties and build up a portfolio and 58% of their respondents had more than one property.

There are currently more than 275,000 properties with a Buy to Let mortgage. Mortgage lenders are offering more competitive and specifically designed packages to make life easier for the landlord.

Gone are the days when the only type of Buy to Lets where varable rate deals now you can expect to choose from fixed rates, discounts and trackers and flexible rates. Most lenders will however expect you to offer at least 20% deposit and also insist that the rent the property will comand covers 130% of your mortgage payments.

Tax Implications

It is important that you seek professional advice from your accountant to bring you up to speed on all tax issues. There are some basic points you might find useful;

  • You will be liable to pay tax on the rental income.
  • Tax will be charged at your highest marginal rate of income tax - that is to say either at the 22% or 40% bracket.

Allowances will be offset against the following rental income;

  • Interest payments on your mortgage, not, however, capital repayments.
  • Maintenance costs.
  • Mortgage arrangement fees.
  • Cleaning costs.
  • Ground rent.
  • Buildings insurance.
  • Service charges.
  • 10% wear and tear depreciation on furniture.