Are there risks involved in buy-to-let mortgages?
Buy-to-let mortgages definitely come with risks. Once you’re on a variable rate, the cost of the mortgage can increase. Plus, you’ll be responsible for all basic maintenance and repairs on your property, meaning you can actually start to make a loss.
If you lose your tenants, or they default on the rent, you’ll start making that potential loss very quickly. A rental property standing empty, even for a short period, means your expenses continue but your income stops.
Getting the right tenants is vital. Bad tenants can cause damage to the property, potentially more than is covered by their deposit, or your insurance.
It’s also possible to make a loss due to property prices going down, which is more than possible in the short term, although unlikely over the whole term of a mortgage.
What should I consider when it comes to a buy-to-let mortgage?
There’s a lot to consider when thinking about buy-to-let mortgage rates and deals. It’s not all about the interest rate.
- Is an interest-only or repayment mortgage best for you?
- Do you want fixed or variable monthly payments?
- What loan to value rate do you want?
- Do you want to add mortgage fees onto your mortgage?
- Will you ever want to overpay or underpay?
- Will you want to take payment breaks?
- Might you need to remortgage?
- Do you need a capped interest rate?