Buy to let applicants are subject to different criteria than someone looking for a residential mortgage. For example, you may need a larger deposit and a higher annual salary, and that’s just the beginning.
However for those who find the right mix of property, finance and tenant a buy to let property can provide you with a steady source of income. The average UK rent yield is over 5%, which makes buy to let appear an attractive options with savings rates at a low.
Buying a property with a buy to let mortgage could help provide an additional source of income which could supplement your salary or pension.
And here is the best tip for a prosperous buy to let portfolio – before applying for a mortgage, always make sure you know the likely rental figure so that you can make sure you can cover the mortgage and other costs to turn a profit.
Ensuring that you can make enough revenue from your buy to let mortgage is the first rule of letting out property.
Chances are the mortgage lenders will be unlikely to grant you a buy to let mortgage if you can’t prove that your rental income will exceed the repayments, so it is an important fact to remember before you apply and make sure you have done your research on rental yields before putting in your offer.
Buy to let tipsIf you want more information on the criteria that most lenders set for buy to let mortgage, read our guide on buy to let mortgage criteria.
However, actually getting the mortgage approved is one of the first things to consider
- Make sure your rental income exceeds the cost of repayments - You need to be able to meet your mortgage payments and other costs as well as hopefully turn a profit using the monthly rental payments from your tenant. A good broker will advise which rate is the best option for your particular circumstances, you can also use one of our online mortgage calculators.
- Think about your target rental demographic - This is one of the most important factors of the buying to let. It includes thinking about the best location for the type of tenants that you are trying to attract.
- Don’t forget about the extra costs - There are a lot of costs associated with buying a property and a buy to let mortgage is no exception. For more information on the additional costs associated with buying property, see our guide on the costs of buying a house.
- Shop around for the best deal - There are some are several specialist buy to let lenders who are not on the high street. There are great deals out there, but you may have to look for them! A good broker will be able to help you out there.
- Be careful - Don’t rush into anything! A buy to let mortgage is a big commitment that could end up making you a lot of money, but it should be thought about carefully. Any long term commitment should be planned, and a buy to let mortgage is no exception.
- Don't overstretch yourself - A buy to let mortgage needs to be considered as a commitment alongside all your other outgoings, what would happen if you could not rent it out for a few months or the boiler needs changing? It’s important to make sure you have a contingency fund in place to help meet unexpected costs.
- Take it one step at a time - If you’re thinking about building a buy to let portfolio or even a property empire, it’s important to carefully consider any investment you make and not stretch yourself too thinly.
If you want to discuss a potential buy to let mortgage then contact London and Country today. We will be able to give you advice on where to start and what sort of costs will be involved.
Contact us today and speak to one of our advisers. Here at London and Country we give award-winning advice that costs you nothing, so you’ll be in safe hands.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.