Response Mortgage Services – Is ‘Buy to Let’ for you?

Confidence is very much back in the housing market. National house prices have risen by around 11% in the last 12 months (according to Nationwide Building Society), and many experts are predicting this cycle will continue for the next 7 -10 years, which is great news for anyone getting onto the property ladder.

Have you considered buying an Investment property to rent out ??

At Response Mortgage Services we have always specialised in the investment property market (Buy to Let) however over the past 6 months we have seen an unprecedented increase in this sort of business. It seems that everyone is wanting to increase their property portfolios (whether that is the 1st time landlord looking to venture into this market or the experienced landlord who has seen it all before).

With the new pension changes coming in next year, allowing anyone over the age of 55 to take their full pension out (rather than having to buy an annuity), it is predicted the ‘Buy to Let’ market will increase even further with many pensioners wanting to get better returns for their money by investing their pension in property (rather than an annuity).

How does Buy to Let work?

You need a deposit of at least 15% to put down on a Buy to Let property (although ideally a deposit of 25% will mean you can obtain much better mortgage deals). Then the most cost effective route is to take an ‘interest only’ mortgage for the remaining amount

As an example:- If you bought a property for £100,000 with you putting down a £25,000 deposit you would be left with a mortgage of £75,000 which would cost around £219 per month (using a notional interest rate of 3.5%). 3 bedroomed properties on the rental market at the moment will achieve around £600 per month. By using these figures you can see how attractive buy to let investing can be (a gain of around £4,668 per year).

Other Things to Consider

Of course, there are always other things to consider when looking at property investment, whether or not you manage the property yourself or use the services of a reputable letting agent. It is great when you are making money on the investment property but you also have to consider what would happen if you have a nightmare tenant !! (and any potential periods where you weren’t receiving any rent), however there is ways of covering yourself against these situations.

You will also need to consider the ‘tax’ implications !! (both income tax and potentially capital gains tax when you sell the property).



If you are looking at venturing into the exciting market place please give us a ring and we will discuss all the above points in more detail and put a strategy in place for you.

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