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Investing in Buy-to-Let Property

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When one has the capital to make a significant investment, the thought of buying a property to let surely
comes to mind.

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When one has the capital to make a significant investment, the thought of buying a property to let surely
comes to mind. Letting out a property can be a fine source of capital growth, however it also requires much
work on the part of the landlord. If it is your intention to purchase a property to let, it is important to know a
few of the pitfalls along the way and how to avoid them.

The first thing you must know is for what purpose you are buying the property. Your objectives might be
income, which is your month to month profits from the tenants, or capital growth, which deals with making
a profit through increased equity from the second property as the value increases over time. This choice
should influence what type of property you purchase and the location of the property.

Maintaining a property is an expensive process. As a guide, you should be aiming to achieve a gross rent of
at least one hundred thirty-five percent of the property’s interest only mortgage repayments. This will help
you cover your costs should anything go wrong with the property.

There are three great differences with buy to let mortgages that you should know about. Firstly is rent
potential. The decision as to whether or not a mortgage is offered is most often based on the rent you will
earn in addition to your income. In some cases your income might not even be considered. Secondly is the
interest rate. Buy to let mortgages come with a slightly higher interest rate. Lastly is the larger deposit.
The deposit is typically a minimum of twenty to twenty-five percent of the property’s value.

Research into the type of mortgage you wish to apply for is important, of course. For many people, fixed
rate interest options are preferable. Repayments for buy to let properties can frequently be done in interest
only repayments, but if you wish to repay the entire value of a property then look for a mortgage that will
allow you to overpay each month if you desire.
Finding a loan that will calculate interest daily instead of annually is more fair to you, since your interest
will be calculated on a current balance instead of on repayments that you have already made through the
course of the year.

Before you decide to apply for your mortgage loan, think about how you want to let your property. You can
let the property in various stages of furnishing, but if you choose to let a property with furnishings you will
have to buy the furnishings and deal with any damage caused by the residents while you are letting the
property. Determine if you can afford to furnish the property, and factor that into the cost you will ask for to
let each month.

Buying a property to let can be an exciting experience, and although it is hard work it can pay off well in the
end. Determine what exactly you want to get out of the letting experience, and how you want to let the
property. After that, the sky is the limit.

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