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Being a Landlord with Buy-to-let Mortgages

In any market the smart investor seeks to purchase at the bottom and then watch their purchase grow, this is no different in the property market. With prices having fallen significantly, many experts in the mortgage industry believe now is the right time to put money into property.

While it is possible to find good deals at anytime, it is much easier at some time than others.  The key to making an investment worthwhile is picking the correct property in the right location as well as choosing the right tenants. The bottom line for first time buyers and long time investors alike is making a savvy purchase by carefully calculating cash flow (ensuring that your income covers all expenses) and saving as much money as possible when you buy!

Buy-to-let Mortgages

Buy to Let MortgagesOnce you have found the right property to invest in you will need a specialised buy to let mortgage. This is one of the sectors that have been hit hardest in the current climate and loans are not as easy to access as they used to, especially if you are looking for first time buyer mortgage deals. A lender is unlikely to take you on unless any expected rental income you earn is at least 130 percent of your mortgage repayment. So let’s say you have maisonettes for sale and your home loan is £1,000 a month, you need to be able to prove you can rent the property for at least £1,300 a month. Buy-to-let Mortgages (BTL) will also only be applicable to individuals who already have a residential purchase and typically have an income of £2500 or more.

Letting Agents

You do not really need to hire a letting agent, but may initially want to use one to find and vet your tenants, this is a considerable option if you buy property in London and are finding it difficult to get people. If you do decide to use a letting agent, they will help you find tenants, collect rent, prepare inventories, deal with tenant enquiries and sort out repairs and maintenance. For this service they will take about 12 to 15 per cent of the rent you receive. If you plan to use one be sure to include their fees in your calculations.

Tenants

To ensure your potential tenants are not the kind who won’t pay when it comes to crunch time it’s best to ask for references (previous landlord, current employer) and carry out credit checks. Before getting any tenants you must join a Tenancy Deposit Scheme (TDS) and is basic protection for both the tenant and the landlord. Landlords usually take a compulsory deposit from a tenant at the start of the tenancy, which acts as a safeguard if the tenant causes any damages to the property. However, it is known that landlords can take their time to return deposits and make unfair deductions. The TDS is there to ensure good practice in this area.

Investing in the UK property market, even in these tough times can still be highly beneficial. Buying and then renting out your property to tenants can bring back a substantial return. Although the UK property market isn’t exactly booming, you can still make some fantastic investments by insuring you buy property at the right price.

More and more people are turning to professional specialist buying agents, to source the savvy buyers below market value properties in their chosen areas and ultimately save them tens of thousands of pounds when they buy… virtually insuring the investment success.

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