If you are a landlord, unless you are fortunate enough to have sufficient savings to be able to buy an investment property outright, it is likely that you will need to borrow some of the funds necessary to buy a property to rent out to tenants. The most popular way of doing this is by arranging a buy to let mortgage through one of the major banks or building societies.
With interest rates so low it is often one of the most financially viable ways of raising some of the funds. When looking into arranging a buy to let mortgage you will need to consider various aspects of the package being offered by the lender such as the interest rate and the fees.
However, did you realise just how much per annum landlords are spending on repayments for such mortgages? Well, according to research carried out by the National Landlords Association (NLA) the total amount of repayments in the last year on this sort of mortgage came to a hefty £21.9 billion.
When you consider that it is estimated that in the region of 1.05 million landlords have buy to let borrowing that works out at an average of almost £21,000 per landlord which we are sure you will agree seems a high figure. Apparently, those landlords that own between 1 to 4 investment properties are making repayments of an average of £10,335 per annum and those owing in excess of 10 properties are making repayments of an average of £55,285 per annum.
There is no doubt that, when considering entering into the investment property market for the first time, a prospective landlord needs to be fully aware that if they do need to borrow money to help fund the purchase that they factor the repayments into their calculations when assessing the financial viability of the business. There are of course many other things that they need to take into account such as any fees, the deposit, the cost of the general upkeep of the rented out property and landlord insurance.
We trust that the above was of interest.