Guide to Buy to Let
Making a Buy to Let venture work for you, can depend greatly on the mortgage deal you choose. Here at HL Consulting, our Chartered Financial Advisors will give you impartial advice regarding today’s market and all the options it offers.
Although a buy to let mortgage is similar to the standard residential home mortgage, it’s important to understand the differences between these loans. Our advisors will be happy to discuss the variations with you, and will help you get to grips with understanding a buy to let mortgage.
Generally, buy to let mortgages do require a larger deposit than a regular mortgage would (usually at least 25%), and you will need to be able to prove to the lender that the rent you will achieve on the property will cover your interest payments on the mortgage by at least 125%. This allows for times the property may remain empty or require maintenance. You will also be required to have money set aside for arrangement fees (this can be as much as £2,000).
The benefits of purchasing a property to rent out offers the alluring appeal of receiving rental income, plus the later possibility of equity which could be unlocked in the future, should the property value increase. You could expect the right investment to return a gross of between 5% and 10%, which is far greater than any savings account could achieve in the current market. However, you do need to consider the risks attached.
With property prices generally rising year upon year, rentals have been increasing as it has become more and more difficult for first time buyers to step onto the property ladder, so it’s fair to say property is generally considered a safe investment. Acting while the market is secure is the key for a successful buy to let deal.