As a first-time landlord, starting your property investment journey can be daunting. Below, we answer the top FAQs we hear from aspiring property investors.
Investing in property will look different for every landlord. Property has many benefits as an investment, and you have plenty of opportunities to diversify your portfolio and maximise your profits with varying property types.
When considering investing in property for the first time, there are a few things you’ll need to consider to get started. Below, we’ve put together the most common questions we hear from first-time landlords to help you begin to prepare for your property investment journey.
1. How do I get started with property investment?
Starting your property investment journey can be daunting, given the broad market of properties, mortgage rates, and property investment finance options. But getting started isn’t as difficult as you might think.
Your deposit
The first thing you need is a deposit for your investment property, as this will directly impact the value of the property you can purchase. To access the most competitive buy to let mortgage interest rates, you’ll need at least a 25% deposit. You can use our buy to let mortgage calculator to find our how much you can borrow and search the latest mortgage rates.
Expert guidance
The next step is to speak to an experienced mortgage broker. They can guide you in the right direction with your property investment plans and determine the type of investment finance available for your specific circumstances.
For example, you may be looking to purchase a typical single-unit flat or terraced house (often referred to as ‘vanilla’ property) and let it out to tenants immediately. This should only require a standard buy to let mortgage product, which should be a relatively straightforward process.
However, you may be looking to purchase a property at auction, for example, to complete some light refurbishment work and then let out the property once this has been completed. In this instance, you would be looking at a short-term property finance option with a bridging loan. Your plans, the property, and whether you will invest in your personal name or a Limited Company (more on this later) will all impact the right type of property finance for you.
Once this has been established, your broker will guide you on the type of property investment mortgage products you could access, and then your property search can begin.
2. Do I need experience in property investment?
Most lenders want you to own your home at a minimum when starting with your property investment journey. This proves to the lender that you have some experience and knowledge of the property market.
If you don’t own your own home, don’t worry; some finance options exist for first-time buyers and landlords. The options are slightly limited, but the more specialist lenders in the sector may be willing to take a view on your application. In this scenario, the affordability calculations will be focused on your income and expenditure.
3. Do BTL lenders look at my income?
All buy to let lenders will need to see that you have some form of income. Some lenders require that you receive a minimum of £20-25,000 per year, while others have no minimum requirement. This acts as a reassurance that you, the borrower, can support any void periods or unexpected bills for the property.
Ultimately, buy to let lenders will focus on the property itself and the level of rental income it can achieve.
4. Should I invest in my own name or via a Limited Company?
The answer here will vary depending on your circumstances and plans for the future. We always recommend speaking to a professional tax advisor before making any buy to let investment decisions, particularly when deciding if a Limited Company structure is correct for you.
Investing via a Limited Company is an increasingly popular choice among landlords due to the benefits on offer. Primarily, this is due to the possible tax benefits. Once again, speaking to a qualified tax specialist is essential to determine if this is your best route.
Read our blog here on how to quickly and easily set up your Limited Company to purchase property.
5. How much can I borrow?
As we’ve said above, generally speaking, you will put down a deposit of 25% for a buy to let mortgage. However, as with all aspects of the property investment journey, the right loan amount for you will vary. This will be determined by the type of product you’re looking for, the property value, and, most importantly, the rental income.
Each lender applies their own stress test against the rental income to calculate the maximum amount of borrowing you can access. An expert broker will be able to advise which lenders allow you to borrow more per pound of rental income and boost the affordability of your next mortgage.
Get started!
If you are considering becoming a landlord, and have any questions about investing in a buy to let property, please don’t hesitate to contact our team of expert buy to let brokers. We’re more than happy to discuss getting you started on your property investment journey and can answer any concerns you may have.
Looking for a buy to let mortgage?
For free, we will compare the available product transfer and remortgage deals on the market that you are eligible for to find you the best option. Get in touch today to see what mortgage rates you could access by calling 0345 345 6788 or submitting an enquiry here.
