Here, we address some of the most frequently asked questions when it comes to investing in a buy-to-let property.
A. The majority of lenders will require that you already own your own home. In addition to this, many also require that you earn at least £25,000 from a source not related to letting but this does differ between lenders. A minimum deposit of normally around 25% of the property value would be required by most lenders.
A. Obviously you can do your own research but the lender will also do their own checks to see whether you have set your rent at the right price once they have carried out their property valuation.
A. No, you have to apply for a buy-to-let mortgage
A. As a landlord, you would be taxed on the income you make through the rent payments in line with your personal income tax liabilities. We recommend speaking to an accountant before purchasing your first property.
A. Most lenders restrict letting to family members as a condition of your mortgage. You would normally need a specialist mortgage in order to let to family and would need to speak to a mortgage adviser about this for more information.
A. This is dependant on your individual circumstances. It often depends on whether you currently have a mortgage to pay on your existing buy-to-let property. If you do, then ultimately a lender will see this as debt that needs to be taken into consideration. We advise you speak to a mortgage adviser who will look at your individual circumstances and advise on what your options are.
A. This is possible but it’s best to speak to a mortgage adviser who can look at your individual circumstance and run through your options.
A. Inventories are always worth doing as it’s a good way to make a detailed list of all the contents and the condition of your property before the tenants move in. This gives you a good starting point when there is a debate over any damage that might have occured during the tenancy period.
A. A property is classed as a HMO if there are more than three tenants living there who aren’t members of the same family. Another indication is if there are shared facilities i.e. kitchen, bathroom, toilet etc. Your choice of lenders may be limited if you’re renting out a HMO, but your mortgage adviser will be able to go through this with you. Councils can also have individual rules around HMO, so if this is something you’re considering, we recommend you speak to your local council.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.