Buy To Let Insurance
Buy to let insurance options. If you are looking to make an investment in a buy to let property, then you are going to need a buy to let mortgage, unless you purchased the property outright. This will mean purchasing buy to let insurance for your property. Many lenders will look to see exactly what return the investment is creating, and they will want to see a rate of between 4 and 9 percent. Becoming a buy to let investor can have several pitfalls, and a number of factors can go wrong. We have given a brief summary of some of the things that can happen below:
Buy To Let Insurance – 5 things that can happen
- You may get a tenant that does not pay the rent and refuses to leave the property. In this situation, you will need to get an eviction order, all of which costs time and money.
- The property value may fall over time, and you could be left in a negative equity situation. The best way to minimise this risk, is to do all of your homework and buy properties in an area where the house prices are improving. This might be because the area has improved transport links, or there has been a government backed regeneration program in operation.
- The interest rates may rise over a period of time, and then the cost of the mortgage could be more than the rent that is coming in. This could be minimised if you had a fixed rate mortgage, and the cost will remain the same over a longer period of time.
- The property may become empty for long periods of time, and you may not be able to find a tenant. This problem could be minimised if you find a property where there is a high demand for rental. This could be the case if you had a property near a hospital, or a large empoyer, so that there is a ready supply of tenants waiting to take properties when they become available.
- The property may suffer from a flood, a fire, or some other type of damage. To reduce the impact of this you will need to have the right cover from your buy to let insurance policy in place so that you can claim in this eventuality. Getting a quote for this is easily done by comparing insurance prices from numerous underwriters.