1. Do your research
Do you clearly understand what a buy to let mortgage is? The risks involved, the benefits, the potential returns? You need to do your research first. The internet has got lots of resources including buy to let guides and buy to let information sites.
Do you know any buy to let landlords? Speak to them. Ask them about the difficulties they’ve had to face, the mistakes they’ve made.
Bear in mind that a buy to let may not be the best investment for you. Have you considered investing your money in shares or just in a high rate saving account? Buy to let mortgage rates may be low at the moment, but there is a risk that property prices might drop in the next years. Is this something you fully realise? Check out buy to let mortgage information on the web.
2. Select the right area
The “right” area has got nothing to do with price. The “right” region is a an area where people want to live, and therefore rent your property. Think about your town. Where do students rent houses? Where are the top schools? Where are the train stations?
3. Do the maths
You need to get a pen and paper and do the maths. What is the cost of the properties you are interested in? What rent are you likely to get? As a rule of thumb, mortgage lenders would like the rent to be 125% of the mortgage repayments at least, and will require a 10% deposit at least. The buy to let mortgage rates are usually higher than conventional mortgage deals and have high arrangement fees. Do some calculations, and check that everything works out for you.
4. You must compare
Do not go to the first bank you see and ask for a mortgage. Shop around, and consider using a broker that specialises in buy to let mortgages. Try specialist sites such as buy to let mortgages or compare the market mortgages to find a local adviser. It costs nothing to ask for information.
5. Know your tenants
Who are you potential tenants? Get to know them, put yourself in their shoes and try to understand what they are looking for in a rental property. Students are likely to look for a place that is easy to clean, comfy but not necessarily sumptuous. Families will probably already have some of their own furniture so you need to take that into account. Young professionals will probably look for neutral, modern properties.