Buy To Let

Be sure what you’re buying for

If you’re buying a rental property, you need to decide whether you’re looking for capital growth or a regular income. Do you want to cover the monthly costs and make a profit to supplement your income? Or do you hope to sell the property later for a profit? This will affect what type of property to buy and where.

Know your mortgage

Buy to let mortgages differ from usual mortgages. Firstly, the interest rate you’re offered will be higher than if you’re buying the house to live in yourself. You’ll also need a bigger deposit to contribute to the overall purchase price – often between 20% and 30% of the price. Your lender will also look at the potential profit you might make, and the risk of investing.

Be aware of the costs

There are more costs to prepare for when you’re renting out a property. The letting agent you use will take part of your income in fees. You’ll also have to set aside money for maintenance of the property, insurance, possible legal fees and more. Remember to take these into account when setting your budget.

Know the risk

Whether you’re looking for an income or intending to sell at a profit, remember that market conditions can change. If rental or purchase prices fall, you could be facing a loss. Get good advice from experts and think it through carefully – talk to Allegro Mortgages for more help.