Over recent years, buy to let has seen a huge rise in popularity triggered by low interest rates and a sharp rise in property prices. At a time where money sitting in a current account yields poor returns, investing in property has proved to be an attractive proposition over investing in other volatile markets. In a market where prices continue to rise in both the sales and lettings sector, those struggling to get a deposit together to buy property has created a huge increase in rental demand and therefore prices. Like any investment, there are no guarantees. However, if approached in the right manner and with the 'know how' investing in bricks and mortar can prove more favourable than other stocks and shares! Research is key into making your money work best and there are two things that are considered in where/what to invest in. Rental yields are vitally important to consider, as this will play a big role when considering which mortgage product to go with. Lenders will value a potential buy to let as similarly to a residential, however will also consider what weekly rent will be achieved in order to make sure the mortgage is covered! Affordability and eligibility are based more on rental return rather than personal income. Rental yields are a shorter sighted interest compared to that of long term motivation for potential capital growth of the property. It is important to consider both, as relying on solely capital growth poses greater risk if things take a turn in the wrong direction. However if invested in the right area, this can prove much more lucrative compared to other potential investments. Smart investments make for good investments, and with the right research and a competent mortgage broker on side to help find the best possible product, a buy to let could provide generous addition to that future pension fund!
