MORE ABOUT Buy To Let MORTGAGES

This has been produced to help would-be first time private landlords to take a simple, but strategic approach to owning and managing investment property for income and/or capital growth. It is by no means comprehensive and any questions it leaves should be directed to a professional financial or mortgage intermediary.

Decide whether you are investing for income or capital growth.

Income from rents received will be treated as earned income and liable for taxes. Any buy-to-let mortgage repayments can be offset against potential tax liabilities. If possible, buy in joint names for better tax efficiency. Have an outline plan with regards to what you ultimately want to achieve ie a target portfolio value from which to draw down on in the future, or just 1 property to boost pension, etc. See our basic example in the property wealth section.

Where should your investment property be situated?

Not necessarily on your doorstep ! Is there a high rental demand in your area ? Could your property benefit from extra growth potential due to better road or rail routes or government regeneration projects in a particular area ? Buying an investment property should be done so on figurework, never emotion.

Do some simple, basic research.

To get a general overview of what properties are selling for and renting for in any given area, go to www.rightmove.co.uk  To get a general overview of a typical local population mix go to www.upmystreet.co.uk  Look up "Letting Agents" in your chosen area and assess rental demand and what property-types rent quickest - they will always be happy to help a new potential client ! Go to www.yell.com

How to choose the right property in your chosen area.

Before you look in any estate agents windows, find a good Letting Agent and prepare a shortlist of questions to have answered. Any good Letting Agent should be able to tell you what to buy and what to avoid, sometimes even down to the street name. You can also ask them to give you rental income estimates when you have begun your property search. This will help to decide if the figures are right for mortgages.

Where to raise Property deposit / future maintanence money.

We think the best option is to use some of the sleeping equity in your own home (you may decide that anything taken will be put back over a 5 to 10 year period).

Secure a Buy-to-Let mortgage.

 

"Are you aware that certain lenders will allow you to remortgage you home for your current outstanding balance AND create a "Reserve Fund" from which you can draw upon at any time ?.....Ideal for Investment Property purchase, because you only start paying the extra interest when you need to draw on extra money !"

There are many schemes available today, but there is a divide amongst lenders offering these mortgages; only 30% of them specialise (so criteria requirements are less fussy). So we think it pays to use our services of a professional broker.

Schemes such as that mentioned above, are ideal for the purpose of raising intitial/further funds from your main residence. It may take you three to six months to source your first/next investment property, but if you've got deposit, refurbishment and maintanence funds readily available, sellers will take you more seriously and this can often lead to a better negotiated purchase price. Furthermore, should a re-financing exercise be later undertaken - after any period of growth from your investment property - any money pulled out could be paid back into this type of residential mortgage, thus lowering monthly interest payments and perhaps putting you back to, or under, your original outstanding balance.

Please note that Buy to Let mortgages are not regulated by the Financial Services Authority.

Life Enquiry has no control or responsibility for the pages you are about to access, or to any subsequent links you may be directed to.