There are a lot of things you need to think about when purchasing a buy-to-let property, and these differ from conventional house purchases. Taking the plunge and embarking on your first Buy-To-Let (BTL) property purchase can be a very exciting experience. But with all the jargon and unknowns of the industry, it can also be a bit overwhelming.
BTL Property Mortgage Eligibility
When it comes to BTL properties, you need to have a minimum annual salary of £25,000 and must have owned and lived in your existing property for at least six months. Of course, the property must be in the UK.
BTL Property Affordability
Most BTL properties are on an interest-only basis, which means your monthly payment covers the interest charged on your loan. Therefore, the amount you owe will not reduce over time. On the other hand, your rental income may help you cover monthly mortgage payments, but you need to repay the mortgage at the end of the term.
You also have an option to take out a BTL on a capital repayment basis. In this case, your monthly payments will cover the interest charged on your loan every month.
Additionally, there are other costs you need to pay with a BTL property that includes conveyancing fees, Stamp Duty, survey fees, letting agent fees, renovation costs, landlord insurance and ongoing maintenance and repair costs.
Landlord Responsibilities
As a landlord, you have legal obligations and a duty of care to your tenants. That’s why before you take a BTL property, you need to research the rental market first. Doing so will help you grasp the local tenant and the types of tenants you will be dealing with. Knowing these things is crucial to set the rent amount and see if it’s worth the investment.
You also need to remember that there will be times when your property will be empty for a specific period, and you need to prepare for this. In the case your property’s value increases, you can sell the property for more than you paid for it.
Another thing is you should understand the tax implications of owning a BTL property. You need to pay tax on the income you earn from the property and any profit you make when you sell it. Don’t worry; you can get tax relief by getting tax advice because rules continuously change. It will also depend on your circumstance if you are able to get tax relief or not.
Make the Right Decisions With a BTL Property
Not all investments are created equal. With the increasing number of mortgages available, it can be tempting to write a cheque and simply take out a large mortgage. The common mantra of ‘buy-to-let’ has spawned an industry surrounding this term. However, the rental market is not as flexible as it used to be. It’s worth bearing in mind that due diligence is essential before making any decision on purchasing residential property to rent out. It’s best to speak with a professional to guide you through the process and determine if a BTL property is worth the investment for you.
Do you need the help of conveyancing solicitors in Manchester regarding BTL properties? We can help you here at Conveyancing Store Our tool will help you compare conveyancing quotes.
