How to choose a buy-to-let property

16 August 2021 by Terry Hudson

SEARCHING FOR a buy-to-let property to invest in is very unlike looking for a home of your own. Your budget, criteria, and decision-making process will all be different. Here are some of the differences and considerations at each stage.

WHAT IS YOUR BUDGET?

Before looking at properties, you need to establish the price range for your search. This will largely depend on how much you have saved as a deposit and how much a mortgage provider will agree to lend you. Buy-to-let mortgages typically require larger deposits than standard residential mortgages. So, you should plan to have a deposit of around 15% -25% or more of the property value. The mortgage provider will decide how much to lend you based on factors including the expected rental income from the property. The monthly rent you charge for the property will typically need to be in the region of between 25% to 45% higher than the monthly mortgage repayments.

Ask yourself:

  • Should it be a house or a flat?
  • Does it need to have a garden?
  • Will your tenant want space for parking?
  • What nearby facilities will they be looking for?

HAVE YOU DONE THE MATHS?

After you’ve chosen a property that you think would be suitable, you need to do the maths to be sure it’s a sensible investment. Whatever your experience level, rental yields are the number one thing that as an investor you need to focus on! Tips to help you make the right investment choice

About Terry Hudson

Offers more than 31 years’ experience in a client-facing role in the commercial funding sector specialising in multiple-unit residential development