A must read for First Time Landlords looking at Buy to Let Mortgages
So you already own a residential home and have a steady income. Therefore, you have some money to invest but don’t fancy risking it on the stock market and are fed-up of derisory interest rates offered by the building societies and banks.
Welcome to the world of Buy to Let investments. Please google and read my many articles on the subject. Here I’m going back-to-basics on Buy to Let mortgages and attempt to tackle the fundamentals to get you started.
1) Research the market, talk to existing landlords and Buy To Let Mortgage Brokers.
I know Google is a very good tool but nothing beats experience and speaking to professional landlords and Buy To Let Brokers is one way of expanding your knowledge about the buy to let market.
2) Don’t rely on Estate Agents to tell the truth
Most Estate Agents or Letting Agents have their own agenda and are prone to exaggerate rental yields and push purchases up if they think you have surplus purchasing power.
This sentiment is reinforced by the mortgage lenders who seek independent valuers to determine the expected rental level.
3) Get your properties properly valued
Investing in Buy To Let property should be treated with the seriousness of a business and not as a hobby. The property can obviously make money through rentals and capital appreciation but a defective property can do the reverse. Constant repairs and an un-saleable asset will be costly and make a mockery of the original intention.
The minimum level of survey that should be considered is a ‘Homebuyers Report’. You may also want to consider a ‘Structural Engineer’s building survey’. This extra upfront outlay is likely to cost a few hundred pounds more but should be worth it and the cost can potentially be offset for tax purposes.
And, as well as ‘peace of mind’ when it comes to the structure of the property and also give you some well needed ammunition when negotiating the purchase price with the vendor.
4) Choose an ‘Independent’ Mortgage Broker
There is little point in choosing a Mortgage Broker with limited lender choice as you may miss out on a product that is more suited to you. And, as your portfolio grows you will need plan carefully which lender to use, and when, with the backdrop of their respective exposure limits.
Be careful of Brokers attached to Estate Agents as they might have a ‘hidden agenda’. Would you really want the same people selling the property to you to know how much you can really afford?
When choosing your Mortgage Broker ask them whether they have a portfolio. Ask them to guide you on rental location hotspots their other clients have discovered and discuss types of let such as Houses with Multiple Occuptation (HMOs) as these can often produce higher returns.
Make sure that you don’t get sucked into upfront charging with little onerous on the actual delivery.
For a no obligation quote on getting a buy to let mortgage please complete our enquiry form on the right-hand side of this page giving us as much information as you can about the deal.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.Http iframes are not shown in https pages in many major browsers. Please read this post for details.