Lee Langley answers your questions about buy to let mortgages

Why should I consider buy-to-let? Alan from New Malden

If you can raise the deposit, buy-to-let, in our view, can seem like an attractive investment with potentially good returns over the medium to long-term (if compared with current low savings rates for example).

However, you should always ensure that your investment can weather potential interest and tax rate rises in the future as well as any market changes.

You may also consider investing in northern cities and towns such as Leeds which is seeing lots of investment and redevelopment work. Prices are lower and rental yields higher.

Who can get a buy-to-let mortgage? Patrick from Saffron Walden

There are certain criteria that need to be met in order to take out a buy-to-let mortgage on a house or flat. You must, for instance, be able to afford to take the risk.

It helps if you own your own home, although not essential and a good credit rating is important if you want to qualify for the best deals.

Income requirement has typically been £25,000+ per year — however there are many providers who can help if you earn less.

And lastly, your age is considered. Lenders have upper age limits, typically 75 to 85. This relates to how old you will be when the mortgage ends, not the age at which you take out the mortgage. Certain products have no maximum age level as the lending is predominantly based on the expected rental income rather then personal income and expenditure.

What points should I consider when looking for property? Barbara from Dorset

Research the market — do you know the risks as well as the benefits? Your property could be standing empty between tenants, it may need extensive repairs, and plan for rises in interest rates and tax.

  • Choose your area carefully — a bargain isn’t always a bargain and an expensive area may not necessarily provide the return you expect. Think about who you want to rent your property and buy accordingly. Most buyers stay close to home but a different location or a property requiring work can be a better investment.
  • Do your sums — make sure you know what you can afford, as well as any hidden costs and what return you will need. Buy-to-let lenders typically expect the rent to cover 145% of the mortgage payments at a stress tested rate of 5.5% and look for a minimum 15% deposit.
  • Shop around — don’t just go with the bank you use for your personal mortgage, or accept the first offer you get. An independent broker, such as OnPoint Mortgages, can give invaluable advice.
  • Think about your tenants — will they be long or short-term? Families or students? Each type of tenant has a different requirement from location to decor. Matching the two will make your property more attractive in our view.
  • Be realistic — it’s unlikely you’ll make a million overnight. Buy-to-lets can provide a good income but may not provide short-term growth in certain areas. And don’t forget running costs such as agents and maintenance fees. Only when these are taken care of on top of mortgage payments can you consider the profit.
  • Learn to haggle — if you don’t have a property to sell then you have the same advantages as a first-time buyer. This can be a huge asset when negotiating a price. Don’t be afraid to use it!
  • Consider your involvement in the property — buying is only the first step. It is cheaper but undeniably more work to manage the rentals yourself. This means doing advertising, viewings and arranging maintenance yourself. An agent will change a fee which will eat into your income but they will deal with problems and find tenants with little to no input from you.

Lee and the team would be happy to discuss your buy-to-let mortgage requirements – get in touch today: https://www.onpointmortgages.com/contact/

Lee Langley
Director/ Mortgage and Protection Adviser at OnPoint Mortgages
Tel: 07950 672 208 or 0203 633 4940
Email: lee@onpointmortgages.com

Lee is a Director/ Mortgage and Protection Adviser at OnPoint Mortgages, which prides itself on delivering specialist mortgage products based on trust and integrity. L&D Mortgages Ltd trading as OnPoint Mortgages is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority

Some forms of Buy to Let advice are not regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage.