These types of mortgages are designed for property investors and private landlords, who do not intend to live in the purchased property.
Buying additional property for the purpose of letting it, to earn rental income can be risky and complicated. There is no guarantee that house prices will rise nor that rental income will be uninterrupted.
That said, letting a second property to tenants could return respectable financial rewards over the longer term. However, it’s important to properly consider the risks, as well as rewards, involved in ‘Buy to Let’ first.
Decide on your investment objective
When buying a rental property, you will need to decide whether your investment objective is income or capital growth. Are you looking to cover the monthly costs and perhaps make a profit to supplement your income? Or, are you looking to make a profit later upon the sale of the property, with the assumption your property’s value will increase in value over time? The decision may affect the type of property you purchase, its location, and also the risk involved since there is no guarantee that property prices will rise.
If you can’t buy the property outright you will need to consider a Buy to Let mortgage. When it comes to this type of mortgage there are several differences to be aware of.
Normally a lender’s decision about whether to offer a mortgage or not, will be based on the rental potential of the property as well as your own income, though in some cases, your income may not be considered at all.
Other costs to keep in mind
Usually, a minimum of 20% to 30% of the property’s value is required as a deposit, which is often higher than the deposit required for other types of mortgage, and you can expect Buy to Let mortgages to have higher interest rates applicable to them. It’s worth also mentioning that as of 1 April 2016, there is an additional 3% in Stamp Duty to pay if you are buying a second property whether as a home or for purpose of letting.
At Peepal, our Buy to Let Mortgage specialists can give you impartial advice that makes a difference and provide you with the best solutions to supplement your investment objective and strategy.
To get in touch with our Mortgage Adviser for fee free advice, please call us on 01252 416516 or email us at [email protected]. Alternatively, you can also reach out to us via our Facebook, Instagram & Twitter.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Commercial buy to lets are not regulated by the FCA.
SOME BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
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Download our Brexit Housing Guide
Due to the uncertainty of the Brexit deal, buyers and sellers are putting their plans on hold. Similar to Theresa May, buyers and sellers are having difficulties getting the right deal.
We here at Peepal Mortgages share your concern and to bring light into the issue, have put together a concise guide for those of you looking to buy a property.