Entering the Buy to Let property market in Northern Ireland is not as simple as it may first seem there are many things to consider before taking your first step to becoming a Landlord below we answer some of the most frequently asked questions we get in regards to Buy to Let property investment.
Most lenders will impose restrictions on how much total exposure they are willing to risk on a single applicant. Some lenders may only allow you to have 1 property mortgaged with them, some will allow 3 and some lenders may not have any limit depending on your circumstances.
If you wish to expand your portfolio and you aren’t sure where to apply next contact us today our mortgage advisors will assess your circumstances and instantly know where to apply next.
This will not be calculated in the same way as a residential mortgage as well as using your own personal income your lender will expect your rental income to cover the mortgage repayments by at least 125%. In order to prove your expected rental income your lender may ask for a letter which has been stamped and signed by an approved letting agent stating the amount they would expect the property to fetch on a monthly basis.
Repayment or Interest Only – If you want a guarantee that the mortgage will be repaid in full at the end of the term a repayment mortgage is the option for you. Your monthly repayments will be considerably higher but you will own the property outright at the end of the term providing you keep up with the repayments.
With an interest only mortgage you will only be required to pay the interest each month and nothing off the capital, many landlords choose this option for their buy to let properties as it makes their portfolio easier to manage during void periods ( when they have no tenant ) and it also keeps cash free for any unexpected repairs that need to be carried out. They can then save up the excess money collected from rent and pay off the loan in lump sums when they feel the time is right. There is no guarantee that you will ever be able to clear the debt with an interest only mortgage so if you choose this option you must plan carefully for the future.
Fixed Rate Products – There are always plenty of fixed rate products available on the buy to let market they will come in the form of both interest only and repayment loans and are usually 2, 3 or 5 year deals at the end of which you will be moved to your lenders SVR which is usually higher. At this point we would recommend that you consider re-mortgaging for a better rate.
Variable Rate Products – These will usually come in the form of trackers where the interest rate is set a certain percentage above the Bank of England’s base rate or a percentage below your lenders SVR ( Standard Variable Rate ). These deals will also usually last for a predefined period of 2, 3 or 5 years after which you will revert back to the standard variable rate.
It’s important that you fully understand all of the tax implications before committing to buy to let property investment.
If you are in any doubt contact a mortgage broker who can assess your circumstances and explain exactly what you will be liable to pay.
Tax rules on buy to let properties are always changing and for that reason it’s best to contact a professional who can update you with the latest rules and regulations.
It can be if done right but there are plenty of risks involved it’s important that you get your sums right and carefully consider everything renting out property entails before committing to becoming a landlord. Remember never invest money that you cannot afford to loose, if you are in any doubt contact us today and we will guide you through the process.