Buy To Let Mortgages
Although initially popular in the United Kingdom, buy to let (rent) mortgages are becoming increasingly prevalent in the United States as a option for those wanting to buy a property in order to rent it. Buy to let mortgages are set up in a specific way in order to provide advantages for those looking to buy houses as investments, then renting them out at a profit. They typically feature fixed or variable rates, but also tend to require higher down payments -- 15% to 20% -- and higher interest rates than traditional mortgages. But since the lender will factor in the potential income the borrower will be collecting in rent, qualification is based on a different formula than an owner occupied home. With buy to let mortgages, borrowers can qualify for properties they might not have been able to under a straight residential mortgage.
Even considering the higher rates and down payment, a buy to let mortgage can become an incredibly profitable arrangement for the borrower given the right location and economic climate. Fully occupied properties with faithfully paying tenants can generate profit many times your monthly mortgage payment. What's more, this money can be put back into the property, improving it so that even higher rents can be commanded. And if property values increase, this is going to provoke more accumulation of wealth with which one could buy more properties.
On the flip side a buy to let mortgage is like any other kind of investment, and there is always an element of risk involved. Your mortgage payment will stay level regardless of what property values do, and if values tank you could end up not being able to charge enough rent to break even. Also, there is the possibility of non-paying tenants, or tenants that damage the property. Tenant's rights laws vary across the nation and people like this can become a persistent and difficult to get rid of problem.
Considering this, we found the following companies to be the best providers of buy to let mortgages:
Top 2 Buy to Let Mortgages
J.G. Wentworth was founded in 1996 initially to provide customers cash for their structured settlements. Now the company provides a range of financial products including mortgage, mortgage refi, and personal loans among others. J.G. Wentworth also provides buy to let mortgages, which they refer to usually as "mortgages for investment properties." These loans generally require a credit score of 600, an LTV of 20%-25% depending on the number of units, proof of landlord experience, and typically more reserves than you would need if you were planning on occupying the property yourself. You'll have to talk with the company directly to research your options, as the process is not as automated as it is with mortgages or mortgage refinance.
Based in Michigan, Quicken Loans was founded in 1985 and has become the largest online lender in the United States. The company provides many options for straight mortgages, as well as refinancing and reverse mortgages. One great feature Quicken offers is the ability to get preapproved for an investment property before you even find it. This gives the borrower extra bargaining power when negotiating. The company also features home loan experts who specifically specialize in investment properties to assist you. Quicken boasts industry-leading online tools that get buy to let mortgages faster than most companies, and can also connect you with a nationwide network of real estate agents if you need help on the ground.
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