Buy-to-let is a medium to long term investment, so the first thing you might want to ask yourself is, can I afford to tie my money up for a period of time?

How much to borrow

The terms for a buy-to-let mortgage are constantly changing; it can be difficult to keep up to speed with it. For instance, higher and lower rate taxpayers are often treated differently or a five year fixed mortgage might get you a bigger mortgage than a two year fixed.

Typically, landlord mortgages require a higher deposit than you’d need for a residential mortgage, meaning the loan-to-value (LTV) ratio could be smaller than other mortgages, such as first time buyer mortgages, for example.

Buy-to-let mortgage rates can vary depending on several factors, such as:

    • Your credit score
    • How much deposit you’ve put down
    • How risky the loan is
    • The type of mortgage product recommended for your circumstances

For these reasons, it’s always worth seeking advice from a qualified mortgage adviser whose job it is to be ‘in the know’ when it comes to buy-to-let.

Pricing the rent

Deciding how much rent to charge your tenants can be tricky. Generally speaking, the amount you set the rent at will be determined by the market itself. A good way to get a feel for how much you would charge would be to look online at Rightmove and Zoopla and see what a similar size property in the same area is charging.

Once you’ve purchased the property, and therefore know the cost for stamp duty etc., and how much you can expect to receive in rent, you can then work out your rental yield.

For example, this could be:

    • Property value: £165,000
    • Rental income (monthly): £700.00
    • Your expected rental yield: 5.09%

If, after you’ve done the calculations, this amount isn’t quite what you expected, then you can make a decision whether to go ahead with your buy-to-let venture.

To find out more about how much money you could borrow, please contact us today and our team of qualified mortgage advisers will be happy to help.

Important information

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.