How much rent will you need to generate to make buy to let worthwhile?
Property investment can be a rewarding activity, provided you do your research. Buy-to-let mortgages tend to be based on the rental income you can generate from a property, rather than your salary, as with a residential mortgage. That is, a buy-to-let mortgage lender will require you to be able to cover your monthly mortgage repayments with the rental income you receive from a property. Lenders also tend to add a margin of error on top in order to cover any rental voids (periods when you might not have any tenants and so don�t have any rental income). For example, if your lender requires 120% rental income, this means that any rent from the property must cover your monthly mortgage repayments plus an extra 20%.
A sensible next step would be to research the area in which you wish to buy to find out if there are properties available in your price range (if you haven't already). You also need to find out how much demand there is for rental properties, what type of properties are in demand, and if you can feasibly expect to generate the rent needed to qualify for the size of loan you would like.
Those foolish enough to get into buy-to-let without researching such important basics could find their investment soon goes belly-up. It pays to put in the hard work before making such a big financial commitment.
More Useful Mortgage Tools & Calculators
Property Price Predictor | Mortgage Fees Calculator | Key Mortgage Fees Table
Best Buy Table | Directory | Jargon Buster | Buy to Let Calculator
First Time Buyer Calculator | Mortgage Rate Calculator | Refused Credit Calculator
