You can now choose from a wide range of buy to let mortgage deals, including fixed rate, discounted, tracker and flexible schemes. With latest figures telling us that the rental market is booming, it is a great time to speak to a broker who specializes in the buy to let market.
Investing in residential property to rent out in Lilesville can be very lucrative, especially over the last few years where properties have appreciated in value year on year. So if you are looking for an investment plan to buy a house and let it out we can help with your mortgage in seconds.
In the late 90s only a handful of lenders started offering special buy to let mortgages. Now with the market having increased significantly over the last few years most mainstream lenders cater for this market. Buy to let investors can now choose from a vast selection of products but with the offerings varying so much and different lenders requiring different criteria it is wise to talk with a mortgage lender that is a specialist in this field. Not only will theyt give you advise on the best deals around at present but will help guide you through the whole buy to let process.
Requirements for a Buy to Let Mortgage
Generally you will be required to have at least a 15% deposit. The rental that you will be charging for the property will normally need to be at least 125-130% of your mortgage repayments. This is put in place to protect you too since there may be periods when your property will not be let ‘void periods’, either because you have no tenants or perhaps need a few weeks to redecorate before new tenants arrive.
Some lenders have limits to the amount lent on a buy to let property, some are lower than you may think so do check.
How many buy to let properties can I have?
This varies with different lenders, some will limit you to the number of properties you have in your portfolio, others have monetary limits to the portfolio but there are lenders who may allow you to expand your portfolio with no preset conditions except that each additional property makes sound business sense.
Where should I buy?
It is very important that you research your area very well before deciding to purchase a buy to let property. Speak to the local estate agents, especially those that have a letting department within their agency. Find out what the local demand is for, whether their is over supply in the area and which properties are in demand, e.g Flats for professionals or perhaps 3 bedroom house for families because the area has a good selection of schools.
Where can I get help and information?
For all potential landlords the Association of Residential Letting Agents (ARLA) is the best place to go. They have a panel of recommended buy to let lenders and their website gives some very useful information regarding the buy to let market for both landlords and tenants and the potential pitfalls you may expect when entering the buy to let market.
What additional costs may I expect?
You will need to decide whether to instruct an agent to fully manage the property or to just find the tenants and perhaps collect the rent. Letting agents charge different commissions for this and you may get a better deal if instructing one on a sole agency basis. Standard rates vary from 10-15% depending on the service you require.
You are also responsible for the upkeep and general maintenance of the property, so some savings kept aside is advisable. Buildings insurance will need to kept up on your property and you may also wish to instruct the services of an accountant or tax advisor, although many letting agents offer a tax service as an additional cost.