Buy To Let Offset Mortgage - The Sensible Landlords Choice

Buy To Let Offset Mortgage - The Sensible Landlord's Choice

For anyone looking to invest in property, it is tough to get finance right now. Many of the old buy to let lenders have had to exit the market, leaving just a small handful that will demand their landlord borrowers to have squeaky-clean credit and more than enough collateral to cover their investment. That's why the sensible choice should be a buy to let offset mortgage - allowing you to lower your monthly repayments by offsetting earnings against your mortgage. In these tough times, a buy to let offset mortgage will allow landlords to pay their mortgage, cover their backs and invest further.

How does it work?

A buy to let offset mortgage works like any other offset mortgage - you spend and save against your mortgage. This means you can either take money from your mortgage, which makes the loan more expensive, or even better you save money against the buy to let offset mortgage as a lump sum. That is then offset against the loan and a cheaper payment is calculated as a result.

A buy to let offset mortgage is a great choice now, during a downturn because it is a competitive, pro-active savings vehicle. Instead of the volatility of savings rates, the rates with a buy to let offset mortgage are only enhanced by the low Bank of England interest rates. So the rates are lower now, and they will stay low as long as the Bank decides to keep the base rate down.

Also, investing into a property right now is the sensible thing to do - house prices have fallen by more than 15% over the last year*, so clawing anything back will help you remain on a lower loan to value, which in turn will help you find a better mortgage, which saves you money.

So simply, the more you earn from a buy to let offset mortgage, and the more of that is reinvested into the mortgage, the more you can save.

Can I afford it?

Right now rental yields are at around 6%**, meaning over the year you will earn about 6% of the property's value through rental income. Some landlords will earn more, some a little less - but as long as you can cover the buy to let offset mortgage with that and some, you will make a profit every month. And the more you save, month by month, the lower your mortgage payment will be. That means the savings with a buy to let offset mortgage are exponential and will in affect raise the rental yield on your property. So the sensible landlord that can plan their finances carefully can certainly afford a buy to let offset mortgage.

Will I get accepted for one?

Although mortgage finance is tight, especially buy to let mortgage finance, there are still opportunities to get a home loan, especially one that helps you save like a buy to let offset mortgage. Lenders just want to see borrowers proactively saving, proactively reducing their debt and proactively making sensible decisions about their long-term future. And all that can be achieved with a buy to let offset mortgage.

* Nationwide House Price Index, March 2009

** Paragon Mortgages, April 2009

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