Is Buying to Let Right for You?

If you are a first time home buyer, you probably have a lot going on in your mind right now. If you are a young professional, you may be looking to bring in a little bit more income while you establish yourself financially. The idea of buying a home might be a little bit daunting to your right now, and may seem very permanent. If you feel like the home you are searching for is a segue to a later more permanent home, then buying to let might be a good option for you.

Buying a two family or three family home, and leasing the other occupancies can be a great way to cover your mortgage and utility payments while you save toward other investments in your future. This type of arrangement is typically made through and ARLA (Association of Residential Letting Agents) Agent. You have a better chance of getting good rates if you go through an ARLA agent, because the bank sees more security in their investment and return. With a better rate, you will see more of a return on your investment. Moving into a home that you buy to let with an additional renter can cover your household bills and allow you to become more financially settled. When you decide that you are in a place in your life that you would like to buy a single family, you can either sell your multiple family home, or keep it as ongoing income, renting your unit as well.

Essentially, there is little difference between a buy to let mortgage and a typical mortgage. The same credit checks and background checks are necessary. Loans vary in span from anywhere from five years to forty five years, and for up to eighty percent of the home’s value. Before you begin shopping around for a home loan, it is a good idea to get some advice from an ARLA agent.

Here are some tips that will allow you to get the most out of your investment:

If you decide to occupy one of the units in the home that you buy to let, you should make arrangements with those tenants so that your monthly return from those tenants is between 130 and 150% of your monthly expenses for the property. Be sure that you take into account mortgage, maintenance and insurance, otherwise in the long run you will have a lot of out of pocket expenses. Paying an ARLA agent to help with the purchase and financing, as well as letting of your property is not just good for the lender, it is good for you. This specialist will know the market and help you get the most out of your investment.

Until recently, is has been much more expensive to get a loan for a home to let as opposed to a home to occupy as an owner. With recent changes to these policies, you are able to include the anticipated income as a means of calculating your own loan terms from your borrower. This is good for the market and for you.