How much could I borrow with a buy to let mortgage?
What you’ll get is directly linked to what rental income you might get. Most mortgage providers would expect your potential rental income to be between 20-30% more than your mortgage payment.
Are there any risks involved with buy to let mortgages or being a landlord?
Well – where do we start? As with any mortgage or business transaction, there will of course be risks. But you can minimise those risks by just making sure you do some sums (and do them correctly). Areas you’ll need to think about include:
Stamp duty – is now an additional 3% for buy to let mortgages
Landlord tax relief is being phased out – from 2017 the amount of money that landlords can claim back in income tax relief will be slowly reduced over the next four years. This means that by 2021 you’ll only be able to claim back tax deductions at the basic rate.
Mortgage costs – your buy to let mortgage rates may vary according to the type of agreement you go for so always make sure you’ve factored in any fluctuations.
Fees and maintenance – you may have to consider any fees you pay, for example if you use a letting agency to manage your property for you. You’ll also need to make sure that you build in maintenance costs. With landlordship comes great responsibility and you’ll be expected to make sure your tenants live in decent conditions so you need to factor this in. You might be happy to live with leaky taps and broken fences but your tenant might not.
Health and safety – landlords are responsible for annual gas safety checks, you’ll also need to make sure you regularly check any other electrical items are safe and in working order amongst other things. It’s always worth checking out what you need to comply with to stay within the law and calculating how much this might set you back.
Unlet periods – there may be times when your property won’t be lived in, even if you’re a brilliant landlord with the best property in the street, it can happen. So make sure you’ve got a bit of cash stashed away to help in times when you are not receiving a rental income.
So if you’re looking to invest in property and are in the market for a buy to let mortgage, it’s important to make sure you’re getting the right level of cover for you. You can compare buy to let mortgages now and make sure you’re getting the best deal for you.