For many, homeownership has become impossible. People are leaving their homes in record numbers and this means that rental properties are in demand. As investors consider whether or not to take on a buy to let mortgage, they are shopping around for the right property as well as the right interest rate.
So how do today’s rates stack up to the rates of the past? Is this the year to take on that investment project and purchase rental property?
Lower Rates
When compared to the buy to let mortgages of the past, today’s rates have decreased somewhat, making it a great time to take the risk. While these rates are typically more than a traditional mortgage, the rates often follow the same pattern. Any change in interest rates means paying less for the property in the long run. There are benefits to taking advantage of these low rates.
In the future, as the financial situation gets better, there is a chance that the rates will once again increase. However, the interest rate is not the only thing to consider when determining whether or not 2012 is the year to venture into the buy to let industry.
Financing Difficulties
While the rates may be low, it does not mean that everyone can pick up rental property. The amount of money needed as a down payment has increased significantly. An individual looking to become a rental property owner needs to come up with much more capital down if they want to take on the venture.
In the past, lenders required around 15% of the property’s value to be put down. Now, the down payments often start around 25% and increase from there. If someone has the money to invest, they can pick up a great deal.
More Opportunities
With homeowners vacating their properties because of finances, there is a demand for rental property. People need a place to live and they are looking to rental companies and individuals to offer housing at an affordable price. For some, this means that a buy to let purchase is less of a risk.
They feel fairly confident in the fact that they will be able to find someone to rent the property. If they can find a tenant that pays on time, it can be a positive investment with long-term benefits.
If you are looking into a buy to let mortgage, be sure to shop around for the best deal or even consider Melbourne Mortgage for your needs. While you need to keep an eye on the interest rate, you also need to pay attention to the amount you need to put down as well as any fees or penalties that you will need to take care of.
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