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Some people see buying a property to let as a route to a regular income. Others look at the property as an investment for the future or an alternative to a pension. For these and other reasons, buy-to-let has become hugely popular over the last few years. In 1996 the Association of Residential Letting Agents (ARLA) teamed up with a group of big name lenders to promote the idea of becoming a landlord and now almost all major lenders offer buy-to-let mortgages. Buy-to-let mortgages are usually only available up to a loan to value (LTV) of 75% to 85%. Different lenders put in place different provisos, such as no students as tenants. |
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Many insist that the estimated rent on the property cover 125% of the annual interest due on the loan or the monthly repayments. Even if this is not part of the mortgage agreement, it is wise to ensure the rent covers at least this amount so that general upkeep costs can be paid for through rental income and not out of your own pocket. You could also raise the funds on your existing home by taking out a second mortgage or secured loan, remortgage your current home to free up some of the equity already paid off, or even use a flexible mortgage to borrow back cash. This could allow you to rent out your existing property and buy a new home for yourself, or to stay put and buy a second property to rent out. |
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Becoming a Landlord |
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