Choose which option best describes your circumstances
A Buy to Let mortgage is a loan for the purchase or refinancing of a residential property which is let to tenants rather than lived in by the borrower. Buy to Let investments are popular as they offer the prospect of a regular rental income. The value of the property itself may also increase and as such can be regarded as an alternative to the more traditional forms of investment.
There are of course no guarantees. Property values can fall and income will be affected if, for example, the property becomes vacant or the tenants default on
Property investment can be a very effective way of generating income if managed correctly, however, it doesn’t come without its risks. If you plan to buy your property with a mortgage and you are relying on the rental income to make your mortgage repayments, you must consider how you will keep up the repayments if you are unable to secure a tenant and the property is left unoccupied.
A period without a tenant is not the only risk that needs to be considered; major repairs could increase overall costs and of course the housing market on its own can have an impact on your potential profit margin.
We would strongly recommend that you take professional advice before entering into any property related transaction.
Cumberland Estate Agents has an experienced team who can advise you on renting your property. Contact them for further details.
You may also wish to contact a conveyancer (for advice on the Housing Act and associated forms of tenancy) and an accountant (for advice on income and capital gains tax implications).
Buying a property to let is very different from buying your own home. Consider the following before you start your search for a property:
Do your research
Research the market, with the help of your local estate and lettings agents, who will be able to advise on demand and any other issues in the area you are thinking of buying in.
Ask an expert
Speak to a letting agent and make sure you have a professional opinion of the level of income you can expect from the property or area you are looking to buy. Cumberland Estate Agent’s experienced lettings staff can provide you with free advice on any properties you are thinking of buying.
Know the demand
Buying where there is no rental demand is a surprisingly common mistake. Make sure you are not investing in a market which is already saturated with the sort of property you have to offer, and do not be misled by stories of fast profits.
Understand your finances
Keep in mind whether you are in the market for capital gain when you sell or simply monthly rental income. This will help you decide what to buy and where, and what kind of mortgage you need. Understand the rental yields particularly if the net rental yield figure is less than the cost of the mortgage, leaving you with a shortfall.
Make sure you buy a property which allows for sufficient profit margin. Do not go for a ‘bargain’ property which may require considerable work. Major repairs require time and effort and paying more for a property which is in better condition can be a wiser move.
Check for safety
By law you must make sure that the property you are letting complies with various safety regulations, such as furniture and furnishings fire safety, gas safety, electrical equipment safety and that it contains a smoke detector. You will also need certificates to prove these regulations have been met.
Be aware of new and updated regulations
Failure to comply with the law can result in serious consequences. The best way to make sure you are kept up to date is to use an ARLA agent who can make you aware of them, while also ensuring you comply.
Know your responsibilities
Landlords, tenants and agents have different responsibilities, and it is important to know where these lie. As the landlord you will be expected to pay buildings insurance, ground rent and service charges and insure and maintain any items you leave in the property. Your letting agent will be able to advise on others’ responsibilities as part of your contract.
Prepare for voids
Your property may be empty and not generate any income for periods of time, and you need to be ready for this. Advertising for new tenants, decorating and maintenance of your property could take some time and you should have plans in place for when this happens.
A Buy to Let investment attracts several different taxes. Aside from Stamp Duty Land Tax, which you have to pay when you purchase any Buy to Let property, you may also have to pay Income Tax on the rent you receive and Capital Gains Tax when you sell the property. Rental income must be declared on a Self Assessment tax return. However, you can deduct costs such as mortgage interest and letting agency fees from the rent you receive first. And like anything else you own, a Buy to Let property will form part of your estate for Inheritance Tax purposes. We recommend that you speak to an accountant for further details.
Engage a managing or letting agent
Knowing where to advertise your property, how to vet your tenants and the kind of lease you should use can be tricky if you have no experience. Being a landlord is a full time responsibility, 365 days a year and is best not left to friends or family. A good agent will find tenants, do background checks, draw up the lease, collect rent, and inspect the property, thereby removing much of the hassle involved. When choosing an agent, landlords should use an [http:www.arla..co.uk ARLA ]Licensed member. They are members of a regulatory body and are subject to control and regulation. They will ensure that your property is handled safely and with care. [/estate-agents Cumberland Estate Agents] is [http:www.arla.co.uk ARLA ]licensed and offers a full Lettings service.
We will consider mortgages for Buy to Let properties, based on the requirements set out below:
We offer two types of mortgages for Buy to Let properties, fixed rate and variable rate mortgages.
Fixed Rate Mortgage
With a fixed rate mortgage, your interest rate is fixed for an agreed period. During this time your monthly payments stay the same, so you know exactly where you stand. This means that even if interest rates go up, you continue to pay the same amount each month - although if interest rates go below your fi xed rate, your payments won’t be reduced. Most lenders charge an initial fee for arranging a fi xed rate mortgage and, if you repay all or part of your mortgage before the end of the fixed period, an early repayment charge.
Variable Rate Mortgage
This gives you a discount off the lender’s standard variable mortgage rate for an agreed period. If interest rates fall, yours is likely to fall as well, and your payment will go down. However, interest rates could also go up, so you will need to budget for any increases in your monthly mortgage payment. At the end of the discounted period, the rate will normally revert to the lender’s standard variable mortgage rate. Some discount mortgages have arrangement fees and early repayment charges during the discount period.
As a condition of any mortgage you will need to ensure that the property is adequately insured (e.g. Building Insurance), however, this insurance does not have to be arranged through us.
Here are some of the recent awards we have won for our mortgage deals
We offer the best properties at the best prices so find yours on Cumberland Estate Agents.