Need Advice on Buy to Let

[BaconAndAvocado]

DH and I do not have any pensions and are thinking about buying a property to let, with a view to renting it out until the mortgage is paid and then selling it.

We have no real idea if we can afford to,do it or where to start.

Thanks in advance.

The very first thing to think about - is an exit route

Which sounds silly.

But don't buy an easy to maintain flat in a city where it is going to be hard to resell (which is most cities apart from London and Edinburgh). You need to make sure you can resell the property so it needs to be the sort of property that people would want to buy.

You will need a larger deposit with a buy to let mortgage. FUrnish it simply in neutral colours. Be nice to your tenants but make sure you credit-reference them carefully first (and if there are any red flags at all, make sure you take note and do not let to them).

Lettings agencies will offer a range of services. From simply finding you a tenant, which does not cost much, to dealing with everything, which will cost you between 15% and 25% of your rental income.

to the library with you for a book on the subject!

You need to be able to afford the mortgage when it is not let , plus Council Tax, Utilities, insurances etc. BTL mortgages carry higher interest rates and expect a lower loan to value ratio than residential. There are no guarantees you will make money to pay down capital quickly let alone provide a decent income. Rental income is taxable although you can offset some costs such as mortgage interest, fees, maintenance on your HMRC return.

Thanks all.

We don't expect to make a profit on it the short term, it would be more of a long term investment for retirement time.

We have about £300k equity in our property and wasn't sure if we could use this to help buy the new property?

So you'd remortgage your existing property to fund it ? how long term are you thinking .

I guess the full 25 years.

Definitely speak to a mortgage broker. There's much to consider with regards affordability & your existing property.

Will do, thanks.

Bear in mind that your local area may not be the most profitable place to buy.

Buy to let mortgages are usually interest only.

Loads of free educational info at www.thebroadgategroup.com

you have to pay tax on the profit element of the income and capital gains tax when you sell. You might be able to draw down on your residential mortgage and use this to buy the buy to let. Then you can (I think) offset the interest you pay against the income from the property. However, i don't understand what you mean by saying you don't expect a short term profit. There would not be much point paying more in mortgage than you get in rent (unless you are gambling on capital appreciation!!! Ask someone about that who bought in 2007!!