Let's start your property portfolio
Buying property to rent it out to a third party can be a solid investment. That is the main reason people start a property portfolio, particularly when interest rates are so low and you would otherwise get little return on any savings. There are risks attached, of course, just like with any investment, but taking sound advice and gathering all the facts and figures will help you decide if it’s the right path for you and your money.
If you are considering buying a property with the sole purpose of renting it out, you will need a specific Buy to Let (BTL) mortgage. The process of securing a BTL mortgage is similar to that of a standard mortgage, where the lender will require a survey and consider your ability to make the repayments. But they will also take into account how much rent you are likely to receive.
Rules and regulations surrounding Buy-to-Let are constantly changing. There are fewer tax benefits now than in previous years for landlords and you need to consider this. Reeds Financial can guide you through the current BTL market and with access to whole of market BTL mortgages, we can find the right deal for you. We would recommend speaking to us before you start looking at potential properties, just to make sure you have all the relevant information.
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Why do people purchase Buy to Let?
There are several reasons why people become landlords. Investing in bricks and mortar can bring very good returns, especially long term. Some people have property portfolios with several properties and become professional landlords. Some generous parents buy with a view to providing their children with somewhere to live and to start them on the property ladder. Rental holiday homes can also be Buy-to-Let. It is vital to be aware of the risks involved in any kind of property investment, and be sure to seek professional advice before undertaking any such financial commitment.
Can I get a buy-to-let mortgage as a first-time buyer?
Usually, it's quite challenging for first-time buyers to secure a buy-to-let mortgage. Many mortgage providers typically insist that you already own at least one home. However, some lenders might still consider first-time buyers.
In such a situation, seeking assistance from a professional mortgage adviser could be beneficial. They can guide you with confidence and offer the best options tailored to your needs, situation, and financial capacity.
What are the requirements for a buy-to-let mortgage?
Lenders usually need the rental income to be 25–30% higher than your mortgage payment. If the rental valuation of the property is not high enough, the LTV the lender requires might be impacted, meaning you would need a larger deposit.
Can you live in your own Buy to Let?
You can't live in your own Buy to Let property – these mortgages are designed for landlords. You'll need a standard mortgage for a home if you want to live in the property.
What salary do you need for a Buy to Let?
Most commonly, lenders will be willing to provide a buy to let mortgage with no minimum income to people who can supply proof of income that supports their lifestyle – which can be any amount, as long as your personal financial situation is self sustainable.
What are the costs associated with BTL?
The same costs apply when you purchase a Buy-to-Let property, in terms of fees, searches and surveys. Stamp duty is 3% higher across all thresholds, unless you are a first-time buyer. Landlords also have to pay income tax on any rental income (less various allowed costs) and will probably have to pay capital gains tax on the eventual sale of the property. So there is a lot to consider before deciding if BTL is the right investment for you.
What is the difference between a Buy to Let mortgage and a ‘standard’ mortgage?
A mortgage is a loan from a bank or building society for a set period of years. You borrow the amount you need to buy the property, less your deposit, and agree to repay it over a set term, usually 25 years. At the end of the agreed term, the property will be yours.
Are mortgage interest rates higher for Buy to Let?
Yes, interest rates for buy-to-let properties in the UK are typically higher than those for residential mortgages. This is because lenders view buy to let investments as riskier. Factors contributing to this perception include potential fluctuations in rental income, the chance of property vacancies, and landlords relying on tenants for timely payments. The elevated interest rates serve to offset these additional risks associated with buy-to-let investments.
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ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE