Buy To Let

Becoming a private landlord should not be seen as an easy way of making money.

It can be riskier and more complicated. It can also be very time consuming, more than most forms of investment, and there is no guarantee that house prices will rise. That said, having a second property to let to tenants could reap considerable financial rewards over time.

There are 3 main differences in buy to let mortgages:

  • Rent Potential – the decision as to whether or not a mortgage will be offered is usually based on the rent you will earn as well as your income. In some cases your income is not ever considered
  • Interest Rate – buy to let mortgages have slightly higher interest rates
  • Larger Deposit – typically a minimum of 25% of the property’s value is required as a deposit.

When buying a second property to let, you will need to decide whether your primary objective is income or capital growth. In other words, are you looking to make a profit month on month or are you looking to make a profit through increased equity from the second property if it increases in value over time? The decision may affect the type of property you purchase, and the location.

These additional costs include:

  • Property upkeep – maintenance costs for the property.
  • Letting agent’s fees – letting agents charge around 10% of the monthly rent for finding and vetting tenants with an additional cost of around 5% if you require a full management service
  • Ground rent / service charges – applicable to leasehold properties.
  • Legal insurance – to cover costs from evicting tenants in the event of non-payment, very important, as this can be very expensive.
  • Insurance – building insurance and contents insurance for the items provided as part of the rental agreement.
  • Furnishings – the purchase of any furniture. If the property is to be let furnished, make sure you are covered for this by your home insurance.
  • Gas / electrical appliances – cost of maintaining appliances and ensuring they comply with any regulations such as safety tests
  • Decorating costs – the property may require work ranging from painting, to a new bathroom suite before it is suitable for letting to tenants.

When choosing a property to let, it is wise to take advice from local letting agents to determine; what types of properties are in need and which parts of the town are best or most wanted. They can tell you if there is a University in the town, and if students are looking for somewhere to live.

There are a number of ways to fund a buy to let purchase such as standard buy to let and Ltd Company buy to let. We can work alongside your accountancy professional to work out the best way forward for you.

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Mortgages

Buying a property can be the biggest decision made in our lives. It is for this very reason that impartial advice is critical from qualified advisers.

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Protection

There are many types of Protection Policies to choose from. Finding the one that provides adequate cover and the right protection is not as easy as you may think.

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Insurance

We can search through a range of policies to find the one that suits you best from our extensive list of insurers. So this year leave the shopping to us.

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Contact

Over the years we have gained an excellent reputation for our customer service, and pride ourselves on the long term relationships that we enjoy with our customers.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Village Financial Services Ltd is authorised and regulated by the Financial Conduct Authority.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £199.

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The Financial Ombudsman Service,Exchange Tower, London, E14 9SR Tel: 0800 023 4567 or 0300 123 9 123

www.financial-ombudsman.org.uk


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