Buy-to-let mortgage services

Buy-to-let – how to get the most from your investment

The key to making a buy-to-let venture work for you is finding the best possible mortgage deal. That’s why it’s so important to get the right advice – especially in today’s market.

While buy-to-let mortgages are similar to residential home loans, there are some very important differences that we can help you get to grips with.

For example, buy-to-let mortgages require a larger deposit than regular loans (typically 25%), and you’ll need to show the lender that the rent will cover your interest payments on the mortgage by at least 125% – in case the property stands empty for a while or needs maintenance. You should also set money aside for arrangement fees, which can be as much as £2,000.

Contact Mortgages Made Easy today for buy-to-let property advice in Leicester.

Sizing up the benefits of buy-to-let

On the bright side, buying a property to let out offers the appealing prospect of a potential rental income, plus the possibility of equity to unlock later if property values increase. In fact, the right investment can give you a gross return each year of between 5 and 10%. That’s well ahead of what any savings account will currently give you, albeit with more risk attached.

Act quickly!

While average property prices across the UK have been flat in recent years, the market has recently shown encouraging signs of growth with rents on the increase. Acting quickly, with confidence, is the key for buy-to-let deals.

Get the right advice

Buy-to-let investors have the same mortgage options as other borrowers – whether to go for a fixed or discounted variable rate deal, for example. It’s also just as important that they identify the best possible deals. In practice, the best way to pick the right product and find the best value is with the help of an independent mortgage adviser with specialist knowledge of the buy-to-let market. Our expert mortgage advisers will search thousands of available mortgage deals and pick out the one that’s right for your circumstances.

Independent tax advice

For independent tax advice please visit www.cheyettes.com.

A fee of £95 is payable for your initial consultation with a further fee of up to £195 on completion dependant on the work required to secure your mortgage. Commercial mortgages and some buy-to-let mortgages are not regulated by the FCA.

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Buy to let step-by-step guide

Buy-to-let property can be a great way to save and invest for the future, but it’s important you go into it with your eyes open. When house prices are rising and you have good tenants, buy-to-let property investment seems like easy money. But there are plenty of risks to prepare for too. Take your buy-to-let investment plans stage by stage to manage the balance between risk and return.

Start thinking about your mortgage options: Once you’ve found a potential investment property, you’ll need to secure the finance necessary to buy it. Getting the best possible deal on your mortgage is a crucial part of maximising the return on a buy-to-let investment. You’ll need a mortgage specifically designed for buy-to-let – you must tell lenders if you intend to rent out the property you’re borrowing against – and these products operate differently to conventional mortgages for the purchase of a residential home.

Make sure you’ve got the right deposit: Lenders generally expect borrowers to put down larger deposits on buy-to-let mortgages – you will find it difficult to get away with a deposit of less than 25% of the purchase price and for the best deals, you’ll need as much as 40%.

Check if the rent will cover the repayments: The key lending criteria applied by most lenders is not necessarily how much you earn, as with a residential mortgage, but how much rent you’ll be able to charge. Lenders will look for a potential monthly rental income of at least 125% of your monthly mortgage interest payments.

Look for the best deals: In general, buy-to-let mortgages are more expensive than standard residential loans. Lenders argue that they are more risky products and that they therefore need to charge more. Expect to pay 1 to 2 percentage points more than you would for a residential mortgage – charges such as arrangement fees may be higher too. Taking advice will help you find the most competitively priced mortgage.

Calculate the potential return: You’ll often hear buy-to-let investors talk about the rental yield on their properties (or property portfolios). It’s an important figure and it’s simple to calculate – the yield is simply the annual rent you’re earning on the property divided by its value, expressed as a percentage. So a house worth £300,000, on which the annual rent is £24,000 (£2,000 a month) would be yielding 8%.

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