Considerations for future landlords and property investors
The buy to let mortgage market in London is a very popular option for property investors and for first-time landlords too. You may be looking for a long term investment, or an additional monthly income. You may have a property you do not need to sell and would prefer to rent out. Either way, you will need a buy to let mortgage, which Greenacre Financial Services have years of experience arranging.
If you are considering a buy to let mortgage in London, then it is important that you are aware of the most competitive mortgage deals available. They are a special type of mortgage allowing a prospective or current landlord to buy a property with the intention of letting it to tenants. This is a great way to earn extra income and expand your portfolio of property.
It is important to note that buy-to-let is not as simple as it was a few years ago so it is important to be aware of all of the recent changes. Greenacre are here to advise you.
What are the considerations for a buy to let property in London?
Looking for a property to rent is not the same as looking for a residential property to live in as a home. You will need to remove emotion from your decisions and consider the investment potential of the property. Here are some key considerations you should keep in mind before you apply for a buy to let mortgage:
- Talk to your Estate Agents for advice on property type and location. You will need to look at similar rental properties in the area to work out how much rent you will be able to charge each month. You will need the rental income to exceed the monthly mortgage payments.
- Because there will be tax aspects to consider, you will need to decide if the property is for long-term growth, to bolster your income, or both. Getting monthly rental income may push up your total income tax rate and mean you are no longer eligible for certain benefits. Make sure you get independent tax advice from a specialist.
- Talk to a professional mortgage broker about your options. They will guide you through the many regulations and criteria to make sure you get the right buy to let mortgage. Our experts will work with you to carefully select the right mortgage depending on whether you are buying for long-term capital growth or to maximise your income.
It’s easy to check if you’re eligible for a buy-to-let mortgage. Just give us a call and answer some simple questions about your income and outgoings. Use us as your buy to let mortgage calculator!
How to buy to let mortgages in London differ from residential?
A buy to let mortgage comes with extra considerations and criteria you need to meet compared to a residential mortgage. The deposit will usually be higher than a residential mortgage, with the minimum deposit around 25%. Different age limits may apply, some lenders carry a minimum age for mortgage applications of 21 or 25 and will not lend to people over various ages.
Lenders will look at what you will use the property for. Their preference is single assured short-term tenancies (ASTs). Those wanting mortgages on houses for multiple occupations (HMOs), or short term holiday lets, may require a more specialist lender. As we mention above, you will need to show lenders that your rental income, rather than salary income, will cover the mortgage payments.
These are all processes that we can help you with. Our team has years of industry knowledge and will use this experience to help you find the right buy to let mortgage. We have access to exclusive rates from lenders that only deal with brokers like us. We will help you grow and maintain your portfolio with the right mortgage advice.
Whether you want to obtain short-term capital growth, grow a portfolio or earn long-term income supplement, it is important to weigh up all the options with an experienced mortgage adviser.
What else do I need to know about becoming a landlord?
Lenders will make sure you can afford your mortgage every month but there are also other costs to consider as a landlord. Here are a few of the additional costs you will need to consider. We recommend doing further research into costs once you know which property you want to invest in.
- If you decide you want to use a letting agent, research the costs involved. Depending on the level of management you need this can become a large cost.
- Certain London boroughs require landlords to register and obtain a landlord licence before you can let out your property.
- In addition to building insurance, you will need to make sure you have an appropriate level of landlord insurance cover for emergency call outs as well as possible legal expenses.
- Essential energy Performance Certificates show tenants how energy efficient the property. They are generally a small cost but need to be completed before viewings start.
- Landlords are obligated to have an Electrical Safety Certificate to make sure that all correct standards are safely met. This must be renewed every 5 years and at the beginning of each new tenancy.
- Gas Safety Certificate is another legal requirement and must be completed annually. Again, it must be renewed every 5 years and at the beginning of each new tenancy.
- An unpredictable cost is maintenance and repair jobs. Plus, you will need to consider redecoration annually and at the beginning of each new tenancy.
Whether you are looking for a 2-year Variable Rate, 5-year Fixed Rate, or just any of the options you might be eligible for, get in touch to find out more.
Getting the right buy to let advice
Speaking to a Whole of Market independent Mortgage Adviser like us here at Greenacre, can help you to secure the best buy to let mortgage. We are a completely independent Whole of Market mortgage broker, abiding to a duty of care, offering a choice of around 100 lenders and up to 25,000 different mortgage schemes.
For more information about any of our services, including buy to let mortgages in London, please do not hesitate to get in touch by calling us on 0203 3939 222.
