Investing in property using a buy-to-let mortgage is very popular and can be rather lucrative. But make sure you do your homework and invest in property that will give you a decent return on your money invested. Buying residential property to rent out privately has been hugely popular in recent years. Indeed, there are more than 275,000 properties in the UK with buy-to-let mortgages.

Reasons for buy-to-let mortgages popularity:

· Interest rates are low so buy-to-let mortgages are affordable

· Property is a great long-term investment, especially as playing the stock markets is a volatile game

· With the overall UK population rising, a high divorce rate plus growing student numbers, there is plenty of demand for rental accommodation

· Mortgage lenders are offering competitive, specifically designed buy-to-let packages to make life easy for the landlord.

Mortgage types

In the past, the only types of buy-to-let mortgages available were variable rate deals. However, nowadays thee are a whole range of buy-to-let mortgages from fixed rate and discounts to trackers and flexible.
Buy-to-let mortgage lenders will almost always insist that you have a deposit of 20%. So the size of your deposit will help determine the amount you can borrow. Lenders will also insist that the rent the property will command covers 130% of your mortgage payments. This protects both yourself and the lender against rental voids – periods when the property is unattended.
Unlike residential borrowers, most buy-to-let investors opt for interest-only mortgages, simply paying off the outstanding capital. This is repaid on sale of the property.

Choosing the right property

It is essential that you buy a type of property that is in strong rental demand in the right area. For example, you may see a beautiful four-bedroom family that you would like to live in, but if there are plenty such houses in an area, and they are slow to clear, then steer clear as a buy-to-let.
Two-bed flats and houses may be a far better bet, as these tend to be the kind of homes that younger professionals may want. And keep an eye out for features that may or may not add to the rental appeal of a property. You may be a keen gardener, for example, who would not contemplate living without your own patch of greenery. But to busy professional, a garden may just be as chore. So there may be no point in paying extra for a garden that wont be used. And think about maintenance. Many older properties may have more character, for instance, but they do tend to need more looking after.

It pays to view buy-to let properties as long-term investment, so things like choosing a professional letting agent, ensuring you have right insurance and sorting out your tax position are key matters. Also remember this angle on the investment when the hidden costs of solicitor’s fees and furnishing and repairing the property begin to mount up. You have to put in to get out; it’s a matter of time.