Once you have an idea of the kind of
rent you can achieve you can work out how much
you can afford to spend. Most lenders will ask
that rental income is at least 130 per cent of your monthly mortgage
repayments. This means you can borrow
around 77 per cent of the expected income. Once
you have an idea of this from an agent you can
work out how much you can afford to borrow.
Use
our mortgage calculator to see how much you can
borrow, click
here.
03. Compare mortgages
When you have an idea of how much you
can afford to repay each month you can start looking
at mortgages. Manv lenders will offer mortgages
of up to 75 per cent loan to value (LTV) for buy-to-let purchases, but
it is possible to borrow as much as 85 per cent
LTV. There are lots of special offers around so
you can take advantage of a fixed rate or discount
in the early years. Bear in mind that the rental
income may not rise quickly from year to year,
so if you choose a discount you need to be sure
you can still make the repayments after the special
offer has ended, or if rates increase.
Compare buy
to let mortgages, click
here.
04. Find the right
property
With a good idea of how much you can
spend and the types of property that are popular
with tenants you can start looking for someWere
to buy. Remember that you're not buying a house
to live in yourself so it doesn't matter if the
property isn't the type of place you would choose
to live in. It is a good idea to look for someWere
easy - and cheap - to maintain.
Compare buy
to let mortgages, click
here.
05. Apply for a mortgage
Having found the property you want to
buy you need to apply
for a mortgage. This process will
be much the same as when you apply for a standard
mortgage, but on top of the usual paperwork you
may be asked to provide a letter from a letting
agent detailing the kind of rental income you can expect. You may also have to agree to
use an agent to manage the property.
To
apply for a buy
to let mortgage online, click
here.
06. Recruit a letting
agent
Some lenders insist you use an agent
to manage the property; others
leave it up to you. For a fee of around 15 per
cent of the gross rental income you can employ
an agent to find tenants, check out their references
and collect the rent. The agent should also be
able to help you draw up an appropriate tenancy
agreement and will help you compile an
inventory before you let the property.
You can find a local letting agent by visiting www.thepropertyguide.co.uk/agents/
07. Buy the right insurance
As a landlord you will
need buildings insurance to cover
the structure of the property. Make sure the policy
covers buy-to-let properties or is a specific landlord insurance product. If
you are providing furniture or white goods you
may want to buy some contents cover. Legal expenses
cover is another one to consider - it will cover
your costs should you need to take a tenant to
court.
To
compare landlord insurance quotes, click
here.
08. Buy the right
insurance
Rental income is taxable - it will be
added to your other earnings and is subject to
income tax. However, there are a number of expenses
that can be offset against the rent you receive
to reduce your tax bill, including letting agency
fees, mortgage interest costs and, Were the property
is furnished, a 10 per cent allowance for wear
and tear.
For more information on Income Tax,
please visit our Income
Tax Advice page
24-7 Finance endeavour to bring
your the widest choice of financial resources.
Please visit one of our buy to let mortgage partner links
below for more information:
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