A buy-to-let mortgage was first introduced in the United Kingdom. This type of mortgage allows property owners who have the capacity to buy another property for the sole purpose of renting or leasing it out. This was the result of the mid 1990s to the early 2000 housing boom which became very popular for investors in real estate to get loans for money making purposes. Although it is a good business scheme, it also takes deliberate planning and research to make it work.
Those who had invested in this scheme without careful planning got burned in the backlash of the world-wide economic crisis that hit real estate investors. Too many investors failed to come up with the payments of the numerous buy-to-let mortgages that they had taken when the crash hit. This is also the reason why most of those investors literally lost everything, including their own homes, due to foreclosures. But those who did the careful planning are doing very well with their investments.
Just like any investment, through the careful research, the property that is to be purchased has to have the potential to gain money. And it should be noted that it will take some time for interested individuals to take up the lease. During the time when there are no tenants, the borrower/investor would have to make all the payments. And if that goes on for long periods of time, they would be faced with some financial difficulties.
After the economic crash, investors had to find the reasons why the buy-to-let investment bloomed to such an extent. And it was later on discovered that the popularity of this sort of mortgage caused an artificial inflation of the real estate prices, so it is best to think twice as hard before investing in this type of mortgage scheme.