Buy-to-let Mortgage Advice

What is a Buy-to-Let Mortgage?

Buy-to-let properties are some of the most popular investments with good rental yield.
As the name suggests, buy-to-let property is a property that is purchased with the sole intention of letting it out on rent for a specific period.

Buy to let can be good investment and help you make good profits, provided you weigh the rental income with your costs and plan the investment appropriately.

Choosing the right buy-to-let property is not an easy task as it requires you to consider a lot of factors related to you and your tenants. If you are planning to invest in buy to let property, this are some important buy to let things you should know.

1. Always work with an experienced mortgage broker

If you are thinking about taking a mortgage, make sure you work with an experienced buy-to-let mortgage broker instead of doing it all by yourself. Choosing the right buy-to-let mortgage deal can get tricky and a skilled broker would help you navigate through the process in the best way possible.

A buy-to-let mortgage broker would scan the whole market and provide you with the deals that best suit your needs and circumstances. Mortgage advisors will always have your back and guide in making the right decisions.

2.Know your deposit, expenses, and tax

As you choose your buy-to-let property and prepare yourself financially, it is important to consider the following aspects along the way:

Deposit

The deposit in the case of a buy-to-let property is generally 25% of the value of the property. This rate is higher than other residential properties.

Stamp Duty Land Tax

You are required to pay a Stamp Duty Land Tax (SDLT) when you buy a property whose cost exceeds a specific amount. Moreover, if you are purchasing aadditional property as a buy to let you will be required to pay an
additional 3% surcharge over the standard stamp duty rates.

Income Tax

When you purchase a buy-to-let property and put it out on rent, you would be required to pay income tax on the rental income you earn from the same.

Capital Gains Tax

Capital Gains Tax is the tax you are required to pay when you sell a property that is not for your residential home. If you plan on selling your buy-to-let property in the future, it is important to note that you would be required to pay this tax..

Land lord home insurance

You are required to have landlord cover in place while you are renting. Your mortgage lender will have this mention on the offer.

Maintenance Fees

As a landlord, you will be required to pay maintenance fees for all the maintenance work to be done within your property before and after you have let it out on rent. Especially if you have multiple properties in your portfolio and find handling their maintenance hectic, you can hire a letting agent to take care of the same.

3.Chose wisely your location

Always make sure that you prioritize the location where you are willing to buy the property. Select a location that would help you find tenants easily. Area near to high street and train station are always in high demand.

4.Engage with a local estate agent

While you are looking for an ideal buy-to-let property to invest in, it is advisable to get in touch with a local estate agent. Local estate agents often guide people towards suitable properties and give them important information about the rental market to help them put the properties on rent.

5. Have a contingency fund

Buy to let can come with surprising cost so make sure you have enough contingency funds to cover unexpected expenses throughout the course of your rental agreement with your tenants. As a landlord, you may be required to stretch your expenses at any time before prior warning, learning of an imbalance in your budget.

The key to choosing an ideal property is to seek help from experts and refrain from rushing into finalising deals.