How to use Property Investment Finance to become rich!

Property investment finance is one of the keys to making money from property. Whether you choose to be a buy to let property investor, property developer, or something else, You have to master the art of using other people’s money (OPM). Any successful investor will tell you that the best way to make money in this business is to harness the power of someone else's money (normally a lender of some description) to make you money.

If you can learn how to use someone else’s money and make them a profit while becoming wealthy yourself, people and institutions will be falling over themselves to give you more money. This is how the successful investors do it.

When property investors talk about property investment finance, they are usually referring to buy to let mortgages. The buy to let mortgage is the preferred way for the buy to let landlord to finance investment property.

What is a Buy to Let Mortgage?

A buy to let mortgage is a mortgage used to buy a property with the intention of renting the property out. Although if can vary, you would normally need to put down about a 15% deposit and be able to show that the rent you will receive from the tenant is going to cover the mortgage payments by at least 125%-130%.

So if the mortgage was £1000 per month the tenants would need to be paying you at least between £1250 - £1300 per month.

You can get mortgages that require rental cover of less than this and that require less of a deposit, but these figures are the current standard and are useful guidelines for you to work within.

It should go without saying that obviously you are looking at tapping into the best buy to let mortgage rates that are available at the time.

Eligibility

There is a miss conception that you have to already own your own property to be eligible for a buy to let mortgage. This is simply not the case. Depending on the type of mortgage you are looking for and the type of property you are looking at mortgaging, many lenders will simply want to check you make over a certain figure annually (nothing to extravagant – something like £14,000 per year is the norm). Then they are purely interested in if you have a decent credit rating and if the property is a sound investment for them.

So in essence, with a buy to let mortgage you could end up buying a property that you wouldn’t be able to afford yourself on a conventional mortgage. Thats the power of using the correct finance and gearing investment property (leverage), to make your money go further.

Tax Breaks

You can currently offset interest payments on your mortgage against tax on your rental income. There are also some other benefits to consider when looking at property investment finance.

Vist our investment property tax page to learn more about tax on property.

Or alternatively go straight to our uk capital gains tax page for info on capital gains tax

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