calculators
jargon
busterA buy to let mortgage is a loan you take out to buy a property which you intend to rent to tenants. It is a long-term investment which will hopefully generate an income and a capital gain when you sell the property. Please note there is no guarantee that you will make a profit.
Before you choose a property and arrange finance to purchase it there are a number of things to think about.
- Research the market, perhaps talking to estate agents
- Type of tenant you want to attract
- Location ie amenities, station, schools etc.
- Size & Condition of property ie maintenance costs that could be incurred
How much can you borrow?
The size of the loan is usually linked to the expected rental income. This is typically 30% more than the mortgage payment. Also the deposit on these types of property will be around 20% of the value. Please contact us to find out how much you can borrow.
What type of mortgage can you have?
You can have either a repayment or interest only buy to let mortgage.
Costs to think about
- Mortgage payments
- Buildings Insurance
- Contents cover if furnished
- Maintenance costs
- Periods of no rental income
- Mortgage payment increases
- Income tax – profits are taxable
Risks of Buy to Let
- Costs rise unexpectedly
- Property is empty for longer than expected
- House prices do not rise as much as you expect
- Poor location
- Poor condition of property
- Bad
tenants
BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FSA.
