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Buy to Let Mortgages
To Let or Not To Let Mortgages
mortgages can be a great opportunity for the savvy investor.
Ideally, an investor will buy a property with a low property value
and let it out to responsible tenants. The tenants can pay in part
or in whole the amount of the mortgage on the property. The
investor, now a landlord, then accumulates equity, and, as the
property value increases, the investor makes money on the property
while the mortgage is being paid off by the tenants. For someone
with some extra capital, buy to let mortgages can increase wealth
rapidly and with little monetary risk.
But if something sounds too good to be true, it may be. There are
some potential drawbacks to the to-let mortgage both for an
individual and for the population as a whole. A danger in renting
properties is that the tenants that you are letting the property to
have no interest its long-term value. Irresponsible tenants can
create major headaches for any landlord, whether it be because of
late or missed payments, damages to the property, or a lack of care
for the property. It is extremely important that an investor knows
and trusts the tenants that the property is being rented out to.
Secondly, there is no guarantee that the property value will
increase and as we have seen it can even fall, particularly in the
short term. Generally, real estate is a very safe bet as a long-term
investment. However, as we have seen with the recent
mass-foreclosures in the UK and the United States, a sudden shock to
the financial world can send property values spiralling downward,
leaving the owners of the property under considerable financial
Finally, despite the recent upsets UK to-let mortgages are still a
growing trend. A result of this trend could be a situation where the
rich get richer and the poor stay poor. If properties are being
bought up by a certain percentage of the upper class in British
society, the middle class will have less of a chance to buy
property. Property values can be driven up by those who can afford
to pay a bit extra for a property, leaving a middle-class family
looking elsewhere or possibly renting instead of buying. Without
property and equity, these middle-class families have less
opportunity to gain wealth.
The success of to-let mortgages depends upon the investors' and
British society's responsibility. Not only must responsibility be
shown to who rents these to let properties, but also to the breadth
of the to-let mortgage industry.