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Buy To Let Mortgage

Providing individual buy to let mortgage advice.

Becoming a private landlord should not be seen as an easy way of making money. It can be riskier and more complicated. It can also be very time consuming, more than most forms of investment, and there is no guarantee that house prices will rise. That said, having a second property to let to tenants could reap considerable financial rewards over time.

There are 3 main differences in buy to let mortgages:

Rent Potential – the decision as to whether or not a mortgage will be offered is usually based on the rent you will earn as well as your income. In some cases your income is not ever considered.

Interest Rate – buy to let mortgages have slightly higher interest rates.

Larger Deposit – typically a minimum of 20% or 25% of the property’s value is required as a deposit.

When buying a second property to let, you will need to decide whether your primary objective is income or capital growth. In other words, are you looking to make a profit month on month or are you looking to make a profit through increased equity from the second property if it increases in value over time? The decision may affect the type of property you purchase, and the location.

When you manage a property there are many costs involved in addition to the monthly mortgage repayments. As a guide, you should be aiming to achieve a gross rent of about 125% of the rental property’s interest only mortgage repayments in order to cover your costs should anything go wrong.

These additional costs include:

Property upkeep – maintenance costs for the property.

Letting agent’s fees – letting agents charge around 10% of the monthly rent for finding and vetting tenants with an additional cost of around 5% if you require a full management service.

Ground rent / service charges – applicable to leasehold properties.

Legal insurance – to cover costs from evicting tenants in the event of non-payment, very important, as this can be very expensive.

Insurance – building insurance and contents insurance for the items provided as part of the rental agreement.

Furnishings – the purchase of any furniture. If the property is to be let furnished, make sure you are covered for this by your home insurance.

Gas / electrical appliances – cost of maintaining appliances and ensuring they comply with any regulations such as safety tests.

Decorating costs – the property may require work ranging from painting, to a new bathroom suite before it is suitable for letting to tenants.

When choosing a property to let, it is wise to take advice from local letting agents to determine; what types of properties are in need and which parts of the town are best or most wanted. They can tell you if there is a University in the town, and if students are looking for somewhere to live.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please note that some mortgages such as commercial BTLs are not regulated by the FCA.

Contact Us For Full Details
  • 0800 035 2989
  • info@truecostmortgages.co.uk
  • True Cost Mortgages, 3rd Floor, 1 Mann Island, Liverpool, L3 1BP
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The business advice centre limited T/A True cost mortgages is an appointed representative of Julian Harris Mortgages Ltd, which is authorised and regulated by the Financial Conduct Authority. We are Registered in England and Wales. Registered Address Suite 4, 48 Westgate, Skelmersdale WN8 8AZ. Registered Company No 7931506. We are an appointed representative of Julian Harris Mortgages Limited, Julian Harris House, Musgrove, Ashford, Kent, TN23 7UN, which is authorised and regulated by the Financial Conduct Authority. Julian Harris Mortgages Limited FCA Register number is 304155.

UK Guidance – The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK

We will provide you with a free initial consultation and we will always explain exactly what you will be charged before you choose to proceed with an application. Our professional fee charged is £349 which is payable upon receipt of your mortgage offer. We will also be paid commission from the lender.

For Lifetime Mortgages our professional fee charged is £995 which is payable when your mortgage completes. We will also be paid commission from the lender.

Please Note think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please note that some mortgages such as commercial BTLs are not regulated by the FCA.

‘The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk.’

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