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Buy to let is a large subject on its own.  We have a dedicated but to let site available to you. Please click on the link below

buy to let mortgages

Buy to let

Many home owners have direct experience of profiting from property, a buy to let mortgage enables you to benefit from rising property values with the rental income paying your mortgage.

Some people will buy property as a form of pension income. Providing the mortgage is paid off by retirement age then the rental income should provide a regular income in retirement. The prospect of buying and letting a property is now within the reach of many people

House prices can go up and down. We recommend you view your purchase as a long term investment

With stock markets uncertain, investing some money into property can help to balance your investments. Like any investment, buy to let has its risks and rewards. If you take advice and plan your purchase carefully the risks can be reduced.

Buy to let mortgages enable the investor to benefit from capital gearing. You invest a relatively small fraction of the value of a property, but you benefit from the capital growth of the full property value.

for example:            Property value     £100,000

                             Deposit               £25,000

if property rises in value by 5% p.a.

                            Value after 1 yr.    £105,000

                            Gross profit            £5,000

which represents a return of 20% on your investment!

This example assumes that your mortgage costs and expenses are covered by rent received. The costs of buying and selling are excluded.

Where to Buy to Let

An important factor is to be sure that you will be able to let the property. Is there good rental demand? Ideally you would buy a property close to your home so you can check the property periodically. However this may not yield the best rent. What type of property is favoured by tenants, flats or houses?  Consult several local letting agents and ask there opinion, find out what is the going rent. If you find a responsible letting agent you might prefer that they manage your property.

As well as letting directly to tenants, you can let your property directly to the local authority. Usually this is done on a 3 or 5 year period. In this situation, the local authority will guarantee to pay the rent whether the property is occupied or not.

Another option is to let to students. Sometimes colleges or universities will lease your property usually annually and again will guarantee your rent whether the property is let or not

Try to cover all possibilities, what if you cant find a tenant, what if the tenants decide not to pay, what if they damage your property. These are all questions a good letting agent should be able to answer.

Buy to let Mortgage

You will need a deposit of at least 25% for a buy to let mortgage and additional funds to cover survey fees and legal expenses.

All lenders will require that you have an income, this gives the lender piece of mind that the mortgage will be paid even if there is no tenancy in place.

Most buy to let lenders require that the rental income covers the mortgage to some degree. As a minimum the rent should cover the interest only mortgage payment. Some lenders require that the rent covers the interest only mortgage payments by 125% or 130%.

Please phone us to discuss options for any property you are interested in

You can buy to let several properties, a strategy often pursued by professional landlords is to buy properties one by one using the equity in the previous property as deposit for the next.

Buy to let costs

As the landlord, you will be responsible for the upkeep of the property, and the tenants may reasonably expect you to keep the property in good repair. The costs for this must be taken into consideration when you set the rent.

Letting agents will commonly charge 10-15% of the rent as management fee.

As well as your buy to let mortgage there will be associated insurances to consider, for example buildings insurance.

Finally, be aware that the inland revenue regard any net income or gains as taxable.

It is good practice to open a separate bank account for your let property and to channel all income and outgoings through this account. Make sure you keep receipts for any expenditure; you will need these to complete your tax return.