You’ve Decided to Buy and have Chosen a Location…

<< previous topic next topic >>

Having decided that buying-to-let is for you, committing your own money is a big step. So obviously it's vital to get the financial side of things right. These are some of the things to think about before you choose your property.

Setting a Budget

Buying your property isn't the only initial cost to consider when you're thinking about buying-to-let. Of course, there are the usual things like valuations and surveys, solicitors' fees, stamp duty and a deposit. (click here to download our useful budget check list.pdf)

But what other costs should you consider? These are a few of the things you should think about:

Decorating
Renovation Work
Furniture

You'll also have to think about the ongoing costs of running the property once you've bought it and tenants have moved in. If you'd rather not have the hassle of managing the place yourself, a letting agent can do it for you - but it'll cost you around 10-20% of your rental income. In return for this, they'll find tenants and collect rent for you.

And don't forget - your property may not always be earning you money. You might find yourself between tenants and receiving no rent at all. You need to have some way of covering things if this happens. There's also your situation to think about. It's not a pleasant thought, but what would happen if you lost your job due to redundancy, or if you could not work due to a serious illness or had an accident at work?

That's why it's vital you talk to your Simplicity Whole of Market Adviser about critical illness and income protection so you've got the right level of cover in place.

Choosing the right mortgage

Once you've been through all the stages explained earlier, you're ready to choose a mortgage and talking to your Simplicity Whole of Market Adviser is a great place to start. They'll give you all the help you need to work out how much you can borrow and find your ideal buy-to-let mortgage.

As Simplicity are independent whole of market brokers, we can provide you with access to most of the UK's major lenders, as well as many exclusive deals meaning we'll be able to find the right buy-to-let mortgage for you.

The good news for you is there are many attractive buy-to-let mortgages out there now. These deals recognise that you'll use rental income to pay your mortgage and they offer rates similar to the rest of the mortgage market. To qualify for one of these loans, many lenders want your rental income to be more than the monthly mortgage payment.

A few things to consider:

The rent usually has to be at least 125% of the monthly mortgage payment
Re-mortgaging buy-to-let properties is not usually as cheap as re-mortgaging your main residence. You should consider looking for good long term rates rather than initial low cost deals
Be careful about being tied in to a deal with large penalties. If you are a first time landlord you may decide it’s not for you or any person may need to sell quickly. If you have a portfolio consider keeping a couple of your properties and deals without ties in order to give yourself some flexibility.

<< previous topic next topic >>