Looking at this year’s data alone, the average rent across the UK has increased by 1.8%, rising to an average of £941 per month. The UK rental market really is soaring. If you’re looking to buy a rental property and are considering it as a medium or long term investment, there are a few key details you’re going to need to know.
Here’s all your questions answered about buying a house to let…
Who Can Purchase A Buy To Let Property?
There are certain criteria that you have to fit into to be able to purchase a buy-to-let property. This includes:
- You need to earn over £25,000 per year.
- You need to be under a certain age limit. Depending on how long your mortgage is for, (usually 25 years) you want to make sure that you are under the lender’s upper age. This is typically between 70 and 75 years.
- You can prove that you can afford to take on the risks of investing in property. This also includes having a good credit score and history.
- You already have your own home, that can be with another mortgage or bought outright.
These are some of the few things you need to know before buying a rental property, and they’re important to remember. You have a better chance of owning a rental property if you’ve gone through these ideas and agreed that you can do them all.
To help you figure out if you can afford a property, check out the buying rental property calculator.
What’s The Difference?
Mortgages to buy a house and rent it out are similar to your standard mortgages but there are a few differences. Since it is an investment property, it comes with more risk, much like with any investment. This therefore means:
- There are higher fees, interest rates on the mortgage and the minimum deposit needed.
- Most buy-to-let mortgages aren’t regulated by the FCA.
- The majority of mortgages are interest only.
In regards to the deposit rate, you have to put down at least 25% of the property’s value. But bear in mind, it isn’t the same for everyone, it can be as high as 40%.
If you’re looking for houses to rent out, and want to get a good deal on your mortgage, make sure you do your research. Comparison sites can be really effective in ensuring you get the best deal. The top three sites to check out are MoneySuperMarket, Which? and Money Saving Expert.
Buying A House To Let: Our Top Tips…
As much as you can make money from buying a house to let, it can also be very risky. Don’t assume that you will always have tenants, and in the case that you don’t, always plan to pay your outgoings. It also isn’t as simple as selling the property and that will repay the mortgage. The property market can change and this can affect how much your property sells for.
We’re expert solicitors that can guide you through the process of buying a house to let, making it as stress free as possible. Simply get in touch with our team today…