Are you considering buying a property but to rent out? Why not consider buy to let. A buy-to let mortgage is for those who want to buy properties as an investment rather than as a place to live. If you do plan to buy a property to rent out, you will need to get a buy-to let mortgage instead of a standard residential mortgage.
But-To-Let Mortgage:
With a buy to let mortgage it consists of some difference from a standard mortgage. The first thing you will notice is that the fees and rates tend to be much higher due to lenders considering landlords to be at higher risk of borrowing funds than residential mortgage holders. You will find the minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value, although it can vary between 20-40%. The best buy-to-let deals are usually available to investors with deposits of 40% and above. Lending and administering BTL mortgages for consumers is covered under the same laws as residential mortgages and is regulated by the Financial Conduct Authority (FCA)
Most by-to-let mortgages are interest only which means you pay the interest each month, not the capitol amount. At the end of the mortgage term, you repay the original loan in full (most by-to-let mortgages are also available on a repayment basis.
If your aim with your BTL (by-to-let) is to rent out to a close family member (e.g., spouse, civil partner, child, grandparent, parent or sibling) also referred as a consumer by-to-let mortgages and are assessed according to the same strict affordability rules as a residential mortgage, which means most BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA).
Top places for buy to let investments for Residential
When choosing to buy to let for residential you may find since there is a high rise in people renting the rental income is a steady yield that you can increase over time as well as you can make more money as the property value increases.
The best buy to let areas in London are allocated in East London which offers the highest rental yields (E12 postcode, incorporating Manor Park, Little Ilford and part of Aldersbrook are the top buy to let areas in London averaging yields are just 6% and South East London (SE17, incorporating Walworth and Newington, ranks second in the best London buy-to-let areas (5.75%)
Top places for buy to let investments for Commercial
If you are choosing to buy to let for commercial the market is broadly split into large scale commercial developments such as shopping malls, multi storey office buildings and smaller commercial premises like corner shops, garages, restaurants and business outlets. The smaller scale commercial property that traditional buy-to-let landlords are beginning to move into as the yields in this sector tend to be higher than in residential property.
Things to consider when choosing an area:
Before purchasing a property there are a few things you may want to consider especially as purchasing a buy-to-let property. When it comes to choosing the right area, you need to keep in mind the kind of tenant you would want to attract. For example, if you are wanting to rent out to student’s, making sure the property is close to universities or having close transport links would be key. Bear in mind the distance to supermarkets, shops, local GP schools and public transport links as being closer to these things is likely to raise your properties appeal.
If you are deciding to self-let the property you want to consider the transport for yourself to travel to and from, making sure your tenants know you are not too far away in case of an emergency. With knowledge of the area, you can personally recommend and pass out useful information like roads, public transport, supermarkets etc.
Avoid traffic hotspots as quieter streets with less traffic often hold their value better and are more attractive to tenants. Researching on any planned regeneration schemes in the area, think about the impact on the property you will be considering, will the plans bring better facilities.