Buy-to-let is becoming an increasingly popular and attractive investment. Here are just a few tips on how to go about it the right way!
1. Beware of high mortgage fees – Although buy-to-let mortgage rates have tumbled, pay close attention to the fees which can push up the cost of your mortgage significantly. For example, although the lowest rate on the market is 2.49 % from Nationwide, a 40% deposit and 2.5% loan fee is required.
2. Do your research – Make sure to inform yourself on the benefits and the risks of the property market. Remember that buy-to-let is not a secure investment as the property may fall in value. Always try to ask someone from the buy-to-let market about their experience.
3. Choose a good area – A one-bedroom apartment in Wales may not be the most glamorous option but it will give you the best returns, according to recent surveys. Keep your eye on properties with a special appeal – for example near a commuter belt, good school, or student campus.
4. Will it work out? – Do the maths. Write down the cost of the house you’re looking out for and how much rent you will get from it. The typical buy-to-let landlord will want to cover 125% of mortgage repayments and will demand a 25% deposit (minimum).
5. Who’s your ideal tenant? – Think about the type of tenant you will want to have in your property. If you’re aiming to accommodate students then prioritise practicality over luxury!