There are lots of things to consider before taking the plunge and investing in property, but follow our fundamentals and you won’t go far wrong.
Top tips for buy-to-let mortgages
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1. Consider the location
You shouldn’t buy a duff property just because it is in a good area, but try and strike a balance between a suitable home in an area where there is demand. Think about what tenants might like to be close to, for example shops, amenities, schools, transport and major cities.
2. Know your audience
When thinking about building type, bear in mind the type of person you intend to let to. If you are buying in a student area for example, is a penthouse apartment a good idea? Will young professionals need to be close to transport links for their jobs? Talk to estate agents and find out what people are after.
3. Vet your tenants
After securing your property, perhaps the next most important step is filling it with the right people. You may want to interview them yourself to see if you get along with them and it is well worth asking for character references to try and ensure they are responsible. You may also want to seek some kind of confirmation of their financial status from their employer or bank to confirm they are trustworthy and likely to pay their rent on time.
4. Navigate the mortgage maze
Don’t just plump for the first mortgage you come across. Shop around to try and find the most suitable deal for your circumstances. You may like to enlist the services of a mortgage broker if you need some help. They will also be able to access special deals that you, as a consumer, aren’t privy too.
5. Compile a budget
The start up costs of buying to let can be fairly expensive, so make sure you have sufficient capital before getting involved. There are running costs that you will need to account for.
6. Cushion the blow
Make sure you have some money to spare to cover unexpected expenditure such as repairing a broken boiler. Your property may also be vacant at some points (known as rental void periods) so you will need to have enough money to cover the mortgage repayments until you find new tenants.
7. Consider the professionals
It may well be cheaper to go it alone, but if you are finding it difficult to cope there is an army of qualified experts on hand, from letting agents to solicitors and accountants.
8. Keep it simple
Don’t decorate the property to your own tastes – think about what prospective tenants might want. For this reason, it may be wise to keep décor and furnishings plain and uncluttered.
9. Get insurance
Make sure you have the relevant cover for your property. Tenants themselves will be responsible for covering their own possessions, but make sure you have all other relevant cover in place or you could be left out of pocket if the worst happens.
10. Go long
Buy to let is not a means of making a quick buck, so view it as a long-term investment and don’t expect overnight success.
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