The most important starting point for a buy-to-let mortgage is choosing the right property, in the right location with the maximum lettings potential.

You need to ensure that you get a property that is attractive to tenants, will not lie empty for months at a time and gives you the maximum return for your investment.

It is vital that you get the best buy-to-let mortgage from the many on offer in the current market place. Buy-to-let mortgages are considered a specialist-lending product and as such you should not expect to get the best deals from the general mortgage marketplace. We recommend you seek the advice of a professional mortgage adviser and here at Pink we offer impartial advice from a team of professional mortgage advisers who can help you make the right decisions

Getting Started

Advice

When looking for a suitable buy-to-let property you should seek the advice of a local estate agent who specialises in the lettings market. They will be able to provide you with information on the types of properties and areas that are most likely to offer good rental returns.

Look for an ARLA (Association of Residential Lettings Agents) registered agent who will specialise in the buy-to-let market

Price Range

Set yourself a price limit and stick to it!! Remember you will have to put a bigger deposit on a buy-to-let property than you would need for a residential home. Also allow yourself a contingency fund for home buying costs such as stamp duty, valuation and legal fees.

Kinds of property

When looking for your property, remember you are buying for rental purposes and not for your own residential home. You will need to consider properties that are in strong demand in that particular area is convenient for local amenities and has good transport links

Financial Matters

How much can I Borrow?

Generally the amount you can borrow is based on projected rental income for the property. When a valuation of your property is carried out, the valuer will provide an estimated monthly rental income for the property. This figure is used by the lender to calculate the amount you can borrow.

Typically a lender will require the anticipated rental to cover 125% or more of the monthly mortgage payment.

In some circumstances lenders will allow you to offset your annual income to allow you to borrow more.

Buy-to-let is a specialised mortgage product and to get the best one for your personal circumstances, always seek advice from a mortgage professional.

What types of mortgage are available?

In today's market place there is a great choice of buy-to-let mortgages. They are available as fixed rate, discounted, tracker and flexible deals with differing options to suit your needs.

Some specialist lenders also consider unusual property types i.e. studio flats or properties above commercial premises.

What fees are involved?

As with any residential mortgage transaction there are a number of fees that you will need to budget for.
An up front valuation fee will be required, the cost will vary according to the estimated value of the property and it's location.

Some lenders will require arrangement and rate reservation fees, either to be paid up front or in some circumstances be added to the mortgage advance.

You will also need to consider solicitor's costs, buildings insurance, stamp duty fees and any service charges that will apply if the property is a flat.

Top Tips for buy-to-let mortgages

• Get the right financial advice
  The buy-to-let market is specialised and competitive, make sure you seek the advice of a professional mortgage adviser.
• Consider all the costs
  As with any other financial transaction, there will be a number of additional costs you will need to budget for. Don't forget to check out all fees and charges up front and budget accordingly.
• Allow for a contingency fund
  Aside from the house buying process, there will always be additional costs associated with being a landlord. Arrange a contingency fund that will cover any unexpected costs i.e. period when the house is not let or maintenance charges.
• Choose the right property
  Always seek the advice of a local letting agent when choosing a property, the wrong choice of location or property type could have a significant impact on your expected rental income.
• Insurance
  Remember to take out a good quality buy-to-let insurance policy. There are a number of policies to choose from, your financial adviser will be able to help you find the right one for you.
• Tax matters
  Taxation is a complicated subject and we recommend that you always seek the advice of a qualified accountant. You should bear in mind the following - You are liable to pay income tax on the rental income you receive and when you come to sell the property you will be liable for Capital Gains Tax.