Buy to Let

A Buy to Let mortgage allows landlords or prospective landlords to purchase residential property which can then be rented out.

The Buy to Let sector has grown steadily since the late 1990s and many landlords have enjoyed strong growth on their portfolios. Although it may be possible to make money in a short space of time, property should be viewed as a long-term investment, not a get rich quick scheme. The upfront costs such as stamp duty, legal fees and maybe some property maintenance can add up so it’s important you don’t take the investment decision lightly.

Whether you’re looking to invest in property to generate income or capital growth – or most likely both, we can offer expert advice on your mortgage.

The main difference between a buy to let mortgage and a residential mortgage is that the affordability of the loan is primarily based on the rental income the property will generate rather than your earned income. Another difference is that a buy to let mortgage tends to require a larger deposit – typically 25%, although some lenders will accept less.

Over the past few years, product innovation and increased competition amongst lenders has caused rates to fall significantly meaning some buy to let rates are now comparable to standard residential mortgages.

The key to making a successful buy to let investment is ensuring that the rental income is as high as possible and the running costs are as low as possible.

The best way to maximise your rental income is to buy a suitable property in an area with good rental demand and ensure the property is well maintained. A cosy cottage in the middle of nowhere may seem idyllic but most tenant demand tends to be in areas a little more urban with good transport links, schools and employment. By investing in an area of high rental demand, the market rents should hold up well and void periods kept to a minimum.

With regard to keeping running costs to a minimum, your buy to let mortgage could quite possibly be the single biggest factor. By taking independent advice, you can help ensure that your mortgage rate is as low as possible which helps with both cashflow and profit. You could also consider self-managing the property to save on agents’ fees and review your building insurance to ensure you are not paying too much.

All landlords should provide good quality accommodation and the gas, electricity and fire safety requirements are there to protect both you and your tenant. You should also check with your local authority to see if there is a landlord licencing scheme in operation.

As well as identifying the right area to invest, you also need to decide on what property type to buy. A house might attract a family that will stay for years because their children are in school down the road, or a flat might attract a young professional that will ultimately move out after a couple of years to buy a home of their own. A House of Multiple Occupation (HMO) might offer a higher rental yield on paper but once higher maintenance costs and void periods are factored in the net return might not be as attractive.

Other factors to consider are regulation changes and keeping up to date with the tax treatment of property investments. You will need to decide on whether to buy as an individual or in the name of a limited company so you should always seek advice from a good accountant or tax specialist.

At Absolute Mortgage Solutions Ltd, not only will you have access to an expert mortgage advisor but also a landlord with years of hands on experience.

We advise on all types of buy to let mortgages and as well as dealing with the usual household names, we also have access to specialist lenders that do not deal directly with consumers.

Whatever your buy to let needs, we can be on hand to offer advice and support throughout the process.