So, an investment mortgage is similar to the “normal” or traditional mortgage as we call it, in that it is a loan used to finance a property. However there are few slight differences that you should be aware of.
Usually with a “normal” mortgage the amount you can borrow is based upon your salary, but with an investment mortgage lending is … dependent on the income of your investment i.e. your lender is only interested in the earnings that can be achieved from the property itself. Depending on your mortgage lender, they might require that your investment property generates a monthly income of 130% of the monthly mortgage payments.
When seeking an investment mortgage it’s vital to show that you have you’re homework done on the local area where you want to invest. It may even be necessary to produce your own business plan showing that you have considered all of the additional costs and potential future market fluctuations.