Getting a Mortgage on a 2nd Property - The Basics
Over the past decade, real estate investing has increased dramatically in popularity as consumers have realized the power and income potential that comes with owning multiple properties. The number of lenders that offer mortgages for investment properties has also risen steadily over the same period, simply because the demand for such financing was increasing at an exponential rate.
Those individuals who feel that they are capable of owning investment properties must usually seek the financial assistance of a mortgage lender in order to obtain the funds necessary to purchase more real estate. Such specialized lenders offer programs that are identical to those currently available to the rest of the residential real estate market; however, the major differences in obtaining approval often surround the property itself as well as the applicant’s personal situation.
Most Common Type of Mortgage Used: One of the most common types of mortgages that lenders offer for investment properties is called a Buy-To-Let mortgage; this is a loan specifically underwritten for borrowers who want to purchase a secondary rental property. The processors of these loans take various aspects of the applicant’s situation into consideration, as well as the features of the rental property, which may include the number of rental units, the monthly gross income from the rent payments, and several other factors regarding competitive analysis.
Highly Dependant on Ability To Pay: Approval for secondary property loans is also somewhat dependent on the how well the applicant can demonstrate an ability to pay the mortgage for the rental property. For those locations with multiple units, many lenders will only account for a portion of the units contributing to the gross income, therefore they will want to see that the borrower has sufficient means to pay the bills in the event of an empty unit.
