Buy to Let – A Couple of Top Tips!!

I thought I’d share a couple of top tips I have for Buy to Let. 1. Choose the right property Put your personal tastes...

I thought I’d share a couple of top tips I have for Buy to Let.

1. Choose the right property

Put your personal tastes aside and look at the level of demand to steer you away from expensive mistakes.

You should consider the popularity of the area, transport links, local employment, schools and attractions. Buying in the very best areas obviously means you’ll pay high prices but will get a corresponding rent. But buy in a slightly cheaper location and the rent can still be almost as high, giving you a better return on your investment.

You need to weigh up capital growth over rental income. We can provide, if you like, the level of demand in your area.

2. Choose the right mortgage

A Buy-to-Let mortgage is assessed on the rental income that the property is likely to generate, not on your salary like a traditional mortgage. Lenders will typically want the rental income to be at least 125% of the monthly mortgage payments (assuming an interest only product). So if your mortgage payment is £400pm, the rent would need to be at least £500pm. You may be asked to increase your deposit if the figures don’t quite work. Deposits required vary from 15% to 30%, the higher your deposit, the better the interest rate offered.

Most lenders also want you to be employed and have a reasonable earning capacity to act as a cushion. Look out for large arrangement fees and make sure you can cover the repayments should your tenant stop paying or if the property is empty in between tenants. If you’re not a cash buyer – no problem! We can recommend a mortgage broker to help you find the best deal for you.

The above two things might sound obvious but like with any house it’s best to get the foundations right before you begin building your portfolio. Next week I’ll discuss trying to re-cycle your deposit so you leave “little money left in a deal”.

At NGU we do offer property investment deals: Buy-Let, Buy-to-Flip, Lease Options or Rock Solid Rentals. If you do want to receive deals let me know and I can put you on our database or I can arrange a one-to-one no obligation meeting with one of our team. From this we can build up a profile of your investment strategy and then help you with whatever you need!

If you would like to receive our buy to let deals phone 0191 4910344.