In some cases people would be living in a home, but would be buying a rental property which they would rent out for the year. The answer is simple, YES! The lender will calculate the annual income gained from the rental property and use that in the qualification of the loan. This purchase will be classified as an investment. In another case, if the property were bought for a permanent occupancy, it would be classified as permanent occupancy. The rates that come along with investment loans will be higher than permanent occupancy loans. The interest would be sometimes more than one a half times the original. However, down payment would be at a higher level, if the property bought is classified under as a commercial property or a revenue property. This is usually the case when there are more than 6 units which are rented out.

4 Comments »

1. 

   Ah this is good news as my Sister has a buy to let property but she herself wants to move into a bigger house. I will definitely let her know about this.

   yanjiaren’s last blog post..Newsflash: get 1,000 free shares before they all go!

   Comment by yanjiaren — January 20, 2009 @ 11:13 pm

2. 

   Even if it is just for a year it would be considered a buy to let property so that means the rates would be equal to that of any buy to let?

   Comment by James — January 20, 2009 @ 11:35 pm

3. 

   I have been doing buy to let properties for about 10 years now and I have found it is best not to have a mortgage of more than 1/2 the value of the property, because if you do then all you are doing it working for the bank. When the credit crunch bites it is nice to know that even with the lower rents offered, they are still covering the mortgage repayments and someone else is paying for your house for you. As I have no secure income for my old age, buy to let has been a good investment for me to secure some form of pension when I get too old to work. (That will be when I am about 85 years old!)

   Comment by Rae Davies — February 13, 2009 @ 3:12 pm

4. 

   If you already have a property and you need a second loan for a rental property you can get a buy to let mortgage. The companies who do these type of loans have a slightly higher rate of interest, but if you have a job and a steady salary you can get started in the investment business this way. You would need to put down about a 20% deposit, and you can secure the loan with any other properties you may own. Because rental properties provide a level of residual income, you can set up such a business in your spare time. Once you have a number of properties up and running which pay for themselves (it takes about 6)you will find there will be enough profit to provide a certain level of income. However the real money is made when you sell a property for a profit and use that to re-invest in your company.
   Roger Davies

   Comment by Demolition — March 12, 2009 @ 1:50 pm

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