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Getting into buy-to-let

February 23, 2017

Buy-to-let property was one of the investment stories of the noughties. At its 2007 peak, a rush of new lenders entered the buy-to-let marketplace, triggering a raft of better products, higher standards and greater choice for prospective buyers. The credit crunch and recession led to a sharp decline in demand; since then, however, the buy-to-let market has regained some of its momentum, and it remains an option for long-term investors who understand the potential risks and rewards, and who are prepared to pay the higher rate of stamp duty required on the purchase of an additional residential property. 

Before entering the buy-to-let market, you will generally need a deposit of at least 25%. Lenders will want details of the property’s rental potential, your salary, and any other properties you own. The mortgage rates charged on buy-to-let mortgages are higher than on mainstream loans, so careful selection is essential. Many landlords opt for an interest-only mortgage, but a repayment (capital and interest) mortgage is also an option. It is worth noting that buy-to-let mortgage lending is not regulated by the Financial Conduct Authority (FCA). 

One of the principal risks of buy-to-let is that the property might stand empty for a period. Prospective buy-to-let landlords should be certain that they can cover such eventualities, and mortgage lenders are likely to want reassurance that you have the ability to cover the mortgage in these circumstances before they are willing to provide a loan. 





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Elm Tree Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA 511619).
Elm Tree Financial Services Ltd, registered in England No. 7050523. Registered Office: Elm Tree Financial Services,  Holes Lane, Woolston, Warrington, WA1 4LZ. Telephone 0925 815 555

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