The buy to let market is still thriving in the UK, and if you’ve read some of our other blog posts about the housing market at the moment then you’ll realise that perhaps you should get into it now! Especially in our local area of Chelmsford where house prices are rising as the area becomes more desirable. Luckily for your there’s good advice out there so you can get an edge over many others looking to get involved in the buy to let market. Below we’ve outlined our top 3 tips that you need to think about for buy to let mortgages. If you’re just starting out in the market, need to brush up on your knowledge or looking to save some money on your buy to let properties, then this is the article for you.
Our first handy tip focuses on those who are just starting to think about letting out a property. Research the market thoroughly and be ruthless in your decision making. This applies every time you go to start a buy to let scheme. If you don’t get the right research done and keep up to date with the market then you’ll find yourself slipping behind.
What do we mean by this? Well, say you find a little house that you love. Small, 1 bed with a tiny garden – it’s the definition of cute. You plan to rent it out on a buy to let basis. If you’d have done your research you’ll have realised that the area of the property is all wrong. Great catchment areas for kids, no nearby transport or large shops and a strong sense of community. Now consider the property which would be best suited to a commuter, city dweller, student or single loner… do you think any of these people would like to live here? Probably not. If you’d done your research and learnt to be ruthless by choosing against the property you love then you could be running a successful buy to let property and reaping the benefits already.
Might seem too obvious, but you’d be a real fool to go ahead with the buy to let without planning first. More research is needed for this tip, but fortunately you can rely somewhat on the professionals. Planning all the costs before you even start will determine whether you could successfully rent out a property or not – it’s better to find out early if you can benefit from this investment or whether you’re unsuited to taking on a project like this. A professional broker or adviser will be able to tell you what the costs will all total to, but below there are a few costs and options you’ll definitely need to plan for if you want to prepare for hidden costs and keep prices down.
Agency: using an agency to let out your property can help relieve a lot of stress and responsibility from your shoulders. The main responsibilities a letting agency will have include advertising the property, dealing with tenant queries, organising property maintenance and maintaining finances. Of course this will be for a price, usually around 10% of your annual rent.
Tax: you’ll need to pay capital gains tax in the UK if you plan to make a profit from a property that’s not your home – this will definitely be you if you’re running a successful buy to let property. But here’s a little tip for cutting back the tax: you can deduct costs that you’ve spent on improving, buying and/or selling your property (this includes things like decorating, repairs and maintenance).
There are many types of insurance that are available to you on a personal and landlord level – they can help you not only think about the future, but plan for it so that you can avoid the worst case scenario so that your finances, family and property will stay secure.
Landlord Insurance: Landlords Insurance encompasses a wide range of different policy types that will work to protect your home from any damage caused by the tenants in your rented property.
Mortgage Life Insurance: Mortgage Life Insurance means that you can protect your home for your family should you pass away. In the event of your death the mortgage debt would be paid off and the family home would be retained for anyone that you want to leave it behind for.
Active Brokers specialise in mortgages and insurance. We have in-house specialists who are ready to help you find what you need. We’re based in Essex, UK with local knowledge about the Chelmsford area making us the best option if you’re looking at the housing market in this area.
Active Brokers recommend using a broker for any mortgage needs – not just because we are a broker, but because we strongly believe that getting professional advice is a must if you’re taking on any long term financial project such as a buy to let mortgage. Whether you’re a first time buyer or you’ve been renting property for years, it’s always worth checking with the experts to make sure you’re still on the right track.
Apply for a quote here.