If you’re looking for a steady stream of passive income, a diversified investment portfolio, and greater financial independence, becoming a landlord might be of interest to you. Being a landlord can be challenging, but it’s also quite rewarding. If you’re interested, learn how to make a buy-to-let mortgage work for you.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Investment Opportunity
Adding a property as an investment is a great opportunity to enhance your investment portfolio. However, it does mean that you will need to adapt the management of your finances, learn the tax implications, and figure out how to maintain your property. Even though there will be hard work ahead, it’s also a very exciting endeavour. From property search to ongoing maintenance, there is a lot to learn about, so getting help with the mortgage application process will go a long way toward making the journey a bit easier.
How to make a buy-to-let mortgage work for you
If you start out with the right buy-to-let mortgage, you’ll be well-placed for success as a landlord. Seasoned property investors and first-time landlords alike will need to find a deal that works for their current circumstances and will help them meet their future goals.
Buy-to-let mortgages usually come with their own distinct set of rules and requirements, different from a regular mortgage you’d normally have on a home. While the eligibility criteria for a buy-to-let mortgage will differ from a traditional mortgage, one major difference is how the amount you’re allowed to borrow is determined. With a buy-to-let mortgage, the amount you are able to borrow is influenced by the projected rental income you can make from the property. While other income you might receive may also be taken into consideration, it’s the projected rental income that will weigh heavily in determining how much you can borrow.
Many lenders will require that rental income exceeds your mortgage payment by 25% to 45%. This range allows for a buffer so you can manage unexpected expenses or vacancies while still maintaining regular payments.
Getting the most of your buy-to-let property
Obtaining professional mortgage advice is going to be the best thing to do to get the most out of your buy-to-let property. A mortgage adviser will be able to provide a comprehensive overview of the property-buying process, providing you with an outline of repayment costs and charges, and will review the terms with you to ensure understanding. With this guidance, you’ll be able to make an informed decision on the provider and mortgage product.
There are a few other things to keep in mind when searching for a buy-to-let property, like choosing the right property, picking the best location, and opting for low-maintenance properties.
When choosing a rental property, making sure you understand tenant demand is crucial. How big of a property are renters looking for? Find out if there is a lack of supply or a saturated market before making your choice.
And of course, the right location is everything. Research different areas and do a deep dive when you decide on one so you can choose a highly sought-after area. And opt for a property that’s well-maintained and needs little work and/or upkeep so it’s more attractive to buyers and easier to manage on your end.
Looking to explore your buy-to-let mortgage options?
Becoming a buy-to-let landlord may seem like a daunting prospect at first, but if you get it right, it can be an exciting and profitable venture. To learn more about buy-to-let mortgages and to discuss your financing options, contact Dental and Medical Financial Services today.