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Buy-to-Let Mortgages

Letting out a property can bring benefits such as a direct income, as well as long-term capital appreciation in a positive market.

But although the rewards can be high, so can risk and if you need to secure a mortgage to buy a property, our independent mortgage advice service can help you find a deal that’s right for your long-term as well as your immediate needs.

How can Kellands help?

Our advisers will research the market and find the best buy-to–let mortgage options for you and will take you through the whole process, from beginning to end, in clear jargon-free language.

Today, lenders are cautious although the number of mortgage providers is growing. Affordability of buy-to-let mortgages depends on the lender and can be assessed on the rental income or expected rental income of a property as well as the loan to value. Some lenders want borrowers to have a personal income too.

Each lender will have different requirements and Kellands can help review what options are available and help match them to your circumstances.

What will I need to consider?

You need to think about the years ahead as investing in property should be a long-term decision as the costs associated with rental properties can be large and could eat away any potential profit.

Lenders will want to know the property’s potential rental value, which will be assessed by their surveyor but it is something that you should also be clear about before making an offer.

The expectation will be that the rental income on the property is at least 125 per cent of the mortgage repayments. So, if your mortgage payment is £800 each month, your rental income would need to be at least £1000.

There are costs associated with owning a property that you let. Maintenance, annual safety checks, Landlord’s Insurance and Rent Insurance all need to be considered.

Tax is another consideration. Stamp Duty, Income Tax on the rent you receive and Capital Gains Tax when you come to sell the property all need to be factored into your finances.

Before you make any buy-to-let investment you should always investigate the negative aspects as well as the positive.

House prices may be on the up, growth may be slow and prices could fall again. If property prices dip will you be able to continue holding your investment?

Meanwhile, low interest rates may encourage buy-to-let investment; with rent comfortably covering the mortgage, but what will you do when rates rise?

Consider too the standard variable rate you may move to after any fixed rate period. What will happen if you can’t remortgage?

Even in popular areas properties can sit empty. One rule of thumb many buy-to-let investors apply is to factor in the property sitting empty for two months of the year – this gives a substantial buffer.

Homes often need repairing and things can go wrong. You should have enough in the bank to cover a major repair to your property, such as a new boiler.

How do buy-to-let mortgages differ from residential mortgages?

Buy-to-let mortgages are similar to conventional residential mortgages although, on the whole, mortgage rates tend to be higher.

It is also worth being aware that arrangement fees can be considerable and can increase the cost of borrowing.

Will I need a deposit to buy a property through buy-to-let?

It is likely that you will need a deposit of at least 25 per cent of the purchase price of the property. For new build homes, the deposit may be as high as 35 per cent, as lenders may view that the investment is at greater risk.

Our buy to let calculator will help to give you an idea of how much you may be able to borrow.

At Kellands, we have many years of experience as independent mortgage advisors and we will work hard to find a buy-to-let deal that best suits your personal circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Buy-to-Let mortgages are not regulated by the Financial Conduct Authority (unless the borrower or immediate family occupies 40% or more of the property). Commercial mortgages are not regulated by the Financial Conduct Authority.

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