has anybody ever bought a 2nd property solely for the purpose of renting out?

[cutekids]

We were thinking about it over the weekend but are not sure exactly how it works. Anyone any ideas?

Would love to! You can get interest free mortgages and 'to let' mortgages I think. These are cheaper monthly.

Sorry not interest free, I meant pay the interest first. Wish you could get interest free mortgages!

To let mortgages tend to be at a higher rate of interest. You have to inform the lender if you are thinking of letting.

Check the letting market in your area first though. A lot of properties have been bought by companies purely with a view to letting and some areas are now saturated with rental properties. If that is the case, you would have to lower the rent to get any interest and you may then find that the rent doesn't cover the mortgage repayments. Also check out your responsibilities as landlord. There are a lot of statutory obligations which you cannot avoid and which can be onerous and, at times, expensive.

Do your homework first.

You would be liable for capital gains tax on any profit you might make should you sell it, since it has never been a principal residence, plus income tax on any rental income , although this can be offset against repairs, mortgage ineterest, fees, maintenance etc.

YEAH!Me too, mumfor1sttime!
I know they are always looking for properties to rent in this area,Freckle. However,not very clever-hubbie's the one that does all that!-when it comes to rates of interest etc.

Oooh....!All starting to sound a bit scary to me now! Thanks,though,Lizs.

As Freckle said you have to be sure that you can get enough rent to make it worth while, and don't forget that it may be empty between rental contracts. It's not really a great time to do it atm with property values static/rising slowly, if you can't rent it out you won't even be able to sell it at a profit, and you could be seriously out of pocket with stamp duty and fees.

I think that buy-to-let is really one of those things that you have to have money to make money, unless you have enough spare cash to cover all your mortgages if the rental market slumps you could find yourself in serious financial trouble. We have a flat that we used to live in but have rented out for the last 10 years, it's worked very well for us, we haven't made much money on rent but the flat has risen in value, but I wouldn't buy a flat to rent out in the current housing market.