Buying A Property To Rent Out

Buying a property to let can still be a shrewd investment decision, despite the current market conditions. The demand for rented properties in areas such as Chelmsford is quite strong and a regular rental income, coupled with rising house values in the long term, can be an attractive alternative to other forms of investment. Many lenders now offer 'buy-to-let' mortgages at very competitive rates and some include options such as flexible payment terms which allows you to overpay or take payment holidays to allow for periods when the property may not be tenanted. You will be asked to provide a 25% deposit and most lenders will base their loan on the rental income the property can achieve. That means that they will assess what rent can be expected to ensure that this exceeds the monthly mortgage payments normally by 30%. This allows someone to consider an investment property even though they may be fully committed on their existing mortgage.

The ready availability of buy to let mortgages has been reducing because of economic conditions but there are still a number of schemes being offered with a variety of different products, mortgage rates and also specific lender requirements which can often make your choice of loan confusing. This is where we can help. We can discuss the latest available schemes and let you have details of monthly payments so you can compare the different lenders.

Areas To Consider

  • Extra insurance cover will be needed for the property, and the cost of this can be more expensive than normal buildings insurance.
  • If you employ a letting agent to manage your property then they will charge you a fee.
  • The property will need to be maintained, and you should allow a regular amount for this.
  • Rent is a form of income and therefore liable for tax. Whilst expenses such as agents fees, mortgage interest and repair bills can be offset against rental income, this still should be considered. We always advise you employ the services of a Tax Adviser.
  • There may be periods during which the property will be unoccupied and therefore not earning a rental income. You should make an annual allowance for this.
  • Any increase in interest rates will impact on the profitability of the investment property. You need to research these areas thoroughly before making your decision and we would always advise that you talk to some letting agents and seek financial advice.
Buy to Let mortgages are not regulated by the Financial Services Authority