Becoming a buy-to-let landlord can provide you with a useful extra income stream, or even become a full time job. If you are new to the sector, it can be a steep learning curve. Here are some important points to bear in mind.
The minimum deposit for a buy-to-let property is usually 25%, and most lenders will also want to see that you have an income of at least £25,000 per year, separate from your projected rental income. Interest rates on buy-to-let mortgages are usually higher than on standard mortgages, although they are more flexible and can be interest only.
If you have a poor credit history, getting approval for a buy-to-let mortgage will be more challenging, but in some circumstances it may still be possible. It’s best to seek advice from specialist buy to let bad credit mortgage brokers, because they will be best placed to know which are the lenders to approach.
It might be tempting to buy in an area with lower house prices than the one in which you live, but this can be counterproductive if you choose a poor location. Find out from local estate agents what the demand for rentals is in the area, and what monthly rent you can expect to achieve for the type of property you have in mind.
Properties that are close to local amenities with good transport links are going to be easier letting prospects. Think about what type of tenants you want to deal with, such as students, young families, or professionals. Students will want affordable accommodation that is near to their place of study, while families will want features such as gardens and extra bedrooms.
It can be easy to underestimate the amount of work involved in managing a rental property, especially if you intend to fit it in around a full time job. It is important to be aware of your legal rights and responsibilities as a landlord from the outset.
The private rental sector is subject to legislation, and there may be serious consequences if you are found to be in breach of these. Make sure you know the latest legal processes and keep up to date with any changes.
Some landlords prefer to engage the services of a letting agency to deal with the day to day administration. This includes finding and vetting suitable tenants and preparing and completing the tenancy agreement and other necessary paperwork.
The agent can also carry out regular inspections to make sure that the tenant is looking after the property to the required standards, and to give them an opportunity to raise any concerns that they may have.
From time to time, extra expenses will be incurred, such as a replacement boiler or white goods. Make sure that you have enough funds to cover these, and to cover any gaps in between tenancies when you will have no rental income.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
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