What is an Investment Mortgage
Investment mortgage is the generic term used for any mortgage that is obtained for the purpose of buying an investment property. This could be anything from a buy to let flat to a portfolio of ten or more commercial units. Investment mortgages are treated very differently from standard residential mortgages and understanding the key features and implications is one of the first things that any potential property investor should do.
What do Investment Mortgages Cover
An investment mortgage can cover all types of potential property investment. This type of mortgage offers a range of services that would not be needed for a traditional residential property. In particular, investment mortgages are useful for commercial properties or a large portfolio that would simply not be covered by a standard mortgage.
How are Investment Mortgages Repaid
Unlike a traditional residential mortgage, the lender is interested in the income that the property will generate in order to repay the loan. With a traditional residential mortgage, the lender is interested in the employment income of the borrower and not the income or the portfolio of the property.
Anyone looking to obtain an investment mortgage will have to convince the lender that their investment is going to produce a suitable income, in order to repay the mortgage. Consequently, the lender will pay much more attention to the market potential of the property than they would with a standard residential property.
Because of this different way of financing, there is technically no limit to the number of investment mortgages that one individual can hold. Provided the next investment property is viable and offers a suitable return, the lender is likely to put up the necessary cash without due concern to the amount of other mortgages that the investor may also have.
Investment mortgages are available for properties that are being purchased purely for the purpose of generating income and capital gains;
investment mortgages are financed by the income generated from the property and not by the employment income of the individual who owns the investment;
this different financing structure means that, technically, any number of investment mortgages can be obtained.