Buying to let is an option for those looking for an additional income, a nest egg for retirement or as a business opportunity as a landlord. A buy-to-let mortgage is now viewed as a long-term investment rather than a short-term one. If you are willing to play the waiting game and have faith in the market, it could prove to be a very successful investment indeed. Investing in property has paid off handsomely for many people, both in terms of income and capital gains, but it is advisable that you acknowledge the potential advantages and disadvantages before taking the plunge.
MortgageKey are looking to revive the faith in the UK property market. The UK has always been recognised as a nation of home owners; investing in property has always been a stable and safe long-term investment. And it still can be.
Due to a continuous fluctuation in house prices, people have become reluctant to just buy a house and re-sell it for a quick profit. Instead, until there is market stability, buy to let mortgages play the long game by seeing a regular and profitable return from the rental fees.
In the long-term, house prices often outperform inflation and therefore become a worthwhile investment, especially if you choose to sell it.
With a lot of options surrounding buy to let mortgages, and with a 20% or less deposit, they are surprisingly affordable.
The simplicity of buy-to-let is a key selling point. First, you buy a property, then you rent it out to a tenant and make a profit by covering the cost of the mortgage and expenses whilst pocketing any additional mark-up.
Unlike a residential mortgage, you qualify for a buy-to-let mortgage based on the potential rental return on the property, rather than your own personal income.
There’s an increase in demand for rental properties because people don’t have the capital for a deposit and choose to rent instead.
Buy-to-let mortgages can come with very attractive low interest rates.
Before a lender allows you to borrow any money, they will need to secure an existing property or asset against your new buy-to-let loan. To qualify further, you must commit to the intention of letting out the property to tenants, although you don’t need tenants in place beforehand. Just like a regular mortgage, you will re-pay the loan over an agreed period.
Buying property, applying for loans and looking to make a profit all come with risk. To ensure the risks you take are measured, MortageKey have some additional buy to let mortgage advice about reducing the risk and making a calculate decision, before you dive in.
You need to make an assessment about an area where a potential property could become promising. There are varying contributors to consider such as: the appeal of the town or city and its facilities; good transportation links and where the good schools or colleges are located. It’s not just about investing in the most expensive or cheapest, you must think of the area and the potential tenant.
Put yourself in the shoes of your targeted tenant. If you’re targeting students, make sure the property is comfortable but not full of expensive items or furnishings. Young professionals prefer a modern appeal, whereas families prefer a blank canvas. You should always allow tenants the freedom to make their own mark on the property too, this will encourage them to stay for longer periods.
If you think you’re going to be too busy to manage a buy-to-let mortgage process, or feel inexperienced, you can hire an agent to manage the entire operation on your behalf. Despite having to pay an agent fee, it will reduce the amount of time and energy you spend managing the property.
Don’t get in over your head by borrowing too much. As long as you have a rental income which is more than the mortgage repayments itself, you will be covered for most eventualities.
Get the professionals to check any paperwork or tenancy agreements, before you encounter any unexpected issues. Fully understanding the terms of your contractual agreement will put your mind at ease. We hope that these 12 pointers have helped you to better understand buy to let mortgages, the advantages of them and the recommended actions to take before committing to one. It’s important that you fully asses all the positives and negatives before making the decision to secure your assets against a buy-to-let loan. If you have any other queries about buy to let mortgage advice, our advisors will be happy to assist. Otherwise, enquire about a Buy-to-Let mortgage here.
For millions... Read More
Unsurprisingly, when tackling the topic of tax, everybody wants to know how to either pay less... Read More
At MortgageKey, our mortgage advisors are expertly placed to assess your circumstances and... Read More
Moving home but don’t want to sell? A Let to Buy Mortgage could be the option for... Read More
Representative Example: Annual Interest rate of 2.44% fixed for 2 Years followed by 3.59% for the remaining term. Representative 3.50% APRC Variable. Based on borrowing of 150,000 over 17 years repayments of £899 per month. Total amount repayable £198,466. Includes Lender Fee of £995 and Broker Fee of £695.