History of the Investment Mortgage
The very first buy to let mortgage, which was the first main type of investment mortgage, was introduced in July 1996 by Bradford and Bingley. This is surprisingly late, as individuals have been investing in properties for many years, prior to 1996. Before the introduction of the buy to let mortgage, individuals making investments had to raise the finance from their own family home or from alternative sources, which may have involved individual negotiations with lenders.
Popularity of the Investment Mortgage
Although investment mortgages include everything from commercial property to residential buy to let, the vast majority of investment mortgages are still in the residential property market. This market now accounts for approximately 14 percent of the entire mortgage market in the UK, representing investments to the value of nearly £84 billion. The commercial landlord market is also worth a staggering amount, currently sitting at around £50 billion and attracting more investors, every year, with lucrative returns often in the region of 15 percent.
Who Offers Investment Mortgages
This is where the real joy of investment mortgages lies! Investment mortgages have become so popular, throughout the last decade, that they are now widely available from a range of sources including traditional high street lenders as well as specialist providers.
Although the variety of options is a positive feature for the well educated investor, it can also produce a considerable amount of confusion. A new investor should seek the assistance of an experienced mortgage broker or financial advisor to ensure that they identify the most appropriate product for their needs. Unlike a traditional residential mortgage, an investment mortgage will often require room for growth, such as adding an additional property to the portfolio or raising more finance for renovations.
It is this market that has seen the largest growth, with each investor now owning an average of more than 8 properties. For this reason, the ability of an investment mortgage to accommodate growth is considered to be one of the most important, yet often overlooked, features of an investment mortgage product.
Investment mortgages have only been a recognised form of finance for just over 10 years;
since 1996, the buy to let market and, therefore, the investment mortgage market has seen rapid growth;
investment mortgages are now offered by a range of sources including high street banks;
as one of the key areas of growth is the expansion of portfolios by existing investors, the ability of a mortgage product to facilitate this growth has become fundamental.