A rental mortgage
We provide specialized services for investors who want to finance a rental property through a rental mortgage. A rental mortgage allows you to finance a property you want to rent out. For example, if you have bought a new property but want to keep your current home to rent out.
The features of a rental mortgage
- Purpose: The main purpose of a rental mortgage is to buy a property to rent it out to tenants. This can be a flat, house, commercial property or other type of property.
- Lending for Investors: Rental mortgage lenders understand that the risk profile and financial situation of investors are different from that of ordinary homebuyers.
- Interest Rates and Conditions: Interest rates and conditions for rental mortgages may differ from traditional mortgage loans. Interest rates are often slightly higher because of the risk involved.
- Rental Income: When assessing the loan application, lenders may include the potential rental income of the property in assessing the investor's borrowing capacity.
- Collateral: As with regular mortgages, the property purchased is used as collateral for the loan. If the investor defaults on payments, they may lose the property.
The conditions
Mortgage lenders have their conditions for taking out a rental mortgage:
- For example, you are often allowed to finance up to a maximum of 70 to 75 percent of the market value
- There is a maximum amount to borrow
- The property must be thoroughly examined before taking out a rental mortgage
Mortgage interest rate
The way the interest rate works for a rental mortgage is similar to how it works for other types of mortgage loans. There are two main types of interest rates:
- Fixed interest rates
- Variable interest rates
A landlord mortgage usually has a higher interest rate. However, these offer other advantageous terms and conditions. For instance, you are usually allowed to take out a rental mortgage with a relatively low monthly cost.
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Author: Bart Strietman Date: 2023/8/30
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