Buy to Let

With house prices at an all time low, purchasing a property to rent out has become very popular. This type of purchase should be viewed as a long term investment of 10 > 15 years and not a short term one hoping for a quick profit.

Buy to Let mortgages are not normally assessed on your income, but the rental income that the mortgage survey thinks the property will yield The amount of rent the survey feels will be obtained for the property.. This will normally be required to be at least a minimum of 125% of the actual mortgage payment. A deposit of 20% >25% is normally also required.

Generally the price bracket that yields the best return is between £100,000 & £120,000, above this the rentable income may not be sufficient for the lenders purpose.

If you go for a property for multiple occupation (normally students) many lenders will accept them, however their criteria may be limited especially on the number of bedrooms. The property should have only 1 kitchen and 1 bathroom.

First time landlords

Some lenders do not lend to first time landlords or first time buyers, so the options may be slightly restricted.

For a first time landlord it may be advisable to use a letting agent. Letting agents will check references and oversee the letting of the property, they will also be the point of contact should there be any complaints or repairs. They do however charge a fee for this service, normally in the region of 10% of the rental income.

Tenants deposits are now protected by law and landlords taking deposits must sign up to a government scheme.

You should also take advice from an accountant with regards to possible tax implications.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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