Giving you an opportunity to invest in buy to let

Do you hope to invest in a buy to let property? As property prices and rental yields have climbed in recent decades, it’s a step that could boost your financial security in the long term.

However, securing a buy to let mortgage can be difficult. Whilst a traditional mortgage will look at your salary to demonstrate you can meet repayments, a buy to let mortgage will assess the likely rental yield you can achieve. As a result, even if you’ve taken out a mortgage to buy your own home in the past, a buy to let mortgage can seem very different.

One key thing to note with a buy to let mortgage is that they are typically interest-only. This has the benefit of increasing the amount of profit you’ll make from the monthly rental yield as outgoings will be reduced. However, you should make plans to either remortgage, sell or pay off the amount owed at the end of the term.

To secure a buy to let mortgage, you’re also likely to need a far higher deposit. Whilst a 5% deposit is often accepted when purchasing a home to live in, you can expect to need 25-40% for a buy to let mortgage, depending on the lender. If your deposit is on the lower end of the scale, your choice of lenders may be limited. But we can help you find lenders who are likely to approve your application.

As well as the opportunities becoming a landlord presents, you need to weigh up the potential drawbacks too. One of the main cons of a buy to let arrangement is that your money will typically be tied up for a long time. If your financial and lifestyle plans mean you’re unable to invest with a long-term outlook, it’s worth reviewing what alternative options are available. To access your capital locked in a buy to let property, you’ll need to sell it, which can be time-consuming.

Other ‘cons’ that you need to carefully consider before becoming a landlord include:

• all the investment risk being yours, there is no consumer protection;
• being a landlord means additional legal and tax responsibilities, it’s important to understand these before taking the plunge; and
• the risk of ‘void periods’, where you have no tenant but are still liable for mortgage repayments, and the challenges if you have a dispute with a tenant.

If you have concerns or questions about what becoming a landlord would mean for you, and how it could affect your plans, please get in touch. We’ll help you weigh up the pros and cons with your situation and aspirations in mind.

Becoming a landlord is a big step, and there are numerous things to consider and decisions to make. Our team is here to make the mortgage application process as smooth as possible, allowing you to focus your attention on other areas and benefit from a competitive deal that’s right for you.

If you’re hoping to create another income stream or a nest egg for the future through buy to let, please get in touch. Our expert team have extensive experience helping our clients secure the right buy to let mortgage for them, and we could help you too.

Please note: Your home or property may be repossessed if you do not keep up with repayments on your mortgage. There will be a fee for mortgage advice which will depend on the amount you are looking to borrow, your requirements and circumstances. The Financial Conduct Authority does not regulate some aspects of buy to let mortgages.