Buy to Let Advice Milton Keynes
Existing or First Time Landlord Buyers Advice Milton Keynes
Buy to let continues to prove an attractive proposition to both existing landlords and people wishing to enter this exciting sector for the first time. With so many property owners having considerable equity in their main homes and in particular worried about whether their children will reach the first step on the property ladder, or worried that traditional pension methods are not rewarding as they should, more and more people are investing in buy to let.
To find out if you could take out a buy to let mortgage you don’t need to speak to a specialist buy to let mortgage broker. Right-Advice Mortgage Consultancy Ltd (www.right-advice.co.uk) have access to many buy to let deals on the market and can assist with any other queries you may have in this sector.
Buy to Let Advice: What are the Hidden Costs
You will need to have a contingency fund to cover you for periods of time when there are no tenants in the property. A prudent step would be to ensure about three months’ rental income so that you are able to meet the costs of your mortgage repayments.
A letting agent’s fee will need to be paid from the gross rental income. Milton Keynes Letting agents tend to charge in the region of 10 -15 per cent depending on the level of service you want. In fact most letting agents in the south east region charge these amounts typically. It would be wise to use one if you are a first time landlord and have no experience of letting a property as there are many compliance introductions and regulations you should be aware of in which the letting agent should assist you with in ensuring you meet all your obligations.
Don’t forget, not only will the rent need to cover your monthly mortgage repayments, but it will need to be enough for you to cover the costs of buildings insurance (possibly contents insurance if you are furnishing the property or want items such as carpets covered), maintenance and redecoration, plus possible void periods when the property is empty or vacant. It is also possible to take out insurance against non-payment of rent, and to cover legal expenses. You will also need to cover ground rent and possible service charge if the property is leasehold, and any service charges if these are applicable. As a landlord, these are all your responsibility.
Your tenants will be responsible for paying Council Tax and utility bills, TV licences, telephone bills and internet connection costs, for instance.
Buy to Let Mortgage Advice & Guide
A buy-to-let property should be viewed as a long-term investment and not something you undertake with a short-term view. Use the Right-Advice Buy to let guide to obtain more advice and allow us to assist you in finding the best buy to let mortgage deals in the UK from independent brokers including information for first time buyers.
Milton Keynes as a property investment Opportunity
The UK buy-to-let mortgage market is always present because of the need for rented properties.
Milton Keynes is especially attractive because of its geographic location 50 miles in between Birmingham and London, with great transport infrastructure. One of the reasons many company head offices are locating here creating more jobs and in turn more people requiring accommodation.
In recent times it has been said that MK is the fastest growing city in Europe and when you consider its size and increase in population ver the short 30-40 year history that statement would not be hard to believe.
Many mortgage lenders offer specifically designed buy-to-let mortgages at very competitive rates. If you are a first time buyer with no proven record of paying a mortgage, the lender will make more rigorous checks to ensure that you can afford to meet the repayments, and may impose age restrictions as well as specifying a minimum income.
Lenders may consider that they are taking more of a chance with a buy-to-let mortgage, so you may be expected to find a larger deposit than if you were taking out a residential mortgage. The minimum will be 20-25 per cent, depending on your circumstances and possibly the type of property you are looking at. So, in order to buy an investment property costing £80,000, you would need to put down a deposit of at least £12,000. In addition, the lender may also charge slightly higher interest rates and arrangement fees for a buy to let mortgage than they would charge with a residential.
Each mortgage lender will have a method in place to calculate the amount you can borrow. The rent you will be paid must usually be around 130 per cent of your monthly mortgage repayments. So, for example, if your monthly mortgage repayment is £1,000, your tenant should be paying you rent of a minimum of £1,300. The lender will also want to be assured that the property you are proposing to buy is a good long-term investment. You also need to think about whether you could afford repayments if there is a rise in interest rates. Most buy-to-let investors choose interest-only mortgages on two to three year fixed rate deals: however, it is essential to seek specialist mortgage advice from an independent buy to let mortgage advisor first. Right-Advice advisers specialise in the sector and are readily available to assist with your queries.
With an interest-only buy-to-let mortgage you make greater income tax savings, as mortgage interest attracts tax relief on buy-to-lets, but at the end of the term you may still have the entire mortgage loan outstanding. Although there is a great deal of buy-to-let mortgage information around in magazines and online, we recommend you seek buy-to-let mortgage advice from a mortgage broker With an interest only buy-to-let mortgage you make greater income tax savings but at the end of the term you may still have the mortgage loan outstanding. However, you should always seek proper financial advice to ensure that the method of repayment is appropriate for your circumstances.
A buy-to-let property should be viewed as a long-term investment and not something you undertake with a short-term view. Most experts believe you should be looking at a 10 – 15 year term to see a reasonable return on investment. With the right market conditions, you could see a return on your capital in the short term but there is always the possibility that house prices may fall. Don’t forget that you will also have to pay Capital Gains Tax when you sell a buy-to-let, as it will not be your principal private residence.
Tenancy Deposit Protection Schemes
All tenants’ deposits must now be protected and landlords taking deposits must sign up to a government-approved scheme. One scheme is custodial-based, while the other is insurance-based. With the custodial scheme, you must hand over the entire deposit to an interest-bearing fund administered by The Deposit Protection Service; with the insurance-based scheme, you hang on to the deposit yourself but must protect it by taking out annually renewable insurance.
To find out how much you can borrow and what it would cost, contact a buy to let broker.
Other useful websites that may be of interest:
Buy to Let Advice: The Tax Situation
This guide is meant only as a guideline and should no way be accepted as advice regarding your tax liability. The information is correct and current upon write-up production for tax year ending 2016 – we recommend you seek independent advice from a specialist tax advice of your personal obligations and tax liability.
If you take out an interest-only mortgage on your buy to let property, the mortgage repayments are tax deductible -Tax deductible means an expense that is subtracted from your gross income from the property, so that the amount of your income that is liable to tax is reduced.
However this is due to change as relief on higher than basic rate income tax earners.
You are also eligible for tax relief on: rental insurance; property maintenance; letting agency fees; the costs of any professional advice sought after you’ve bought the property; and, if applicable, ground rent and service charges.
Also, 10 per cent of the annual rental income is offset to cover the depreciation in the value of furnishings, sofas, carpets, and so on (but not fittings such as a fitted kitchen or bathroom suite), cleaning, insurance policies on plumbing cover, white goods and gas boilers, accountants’ fees, letting agents’ fees and advertising. A tax advisor can help you complete your tax return form.
You will, however, have to pay tax on your rental income. You will also be charged Capital Gains Tax when you sell the property, at the highest rate of income tax, unless you can demonstrate that it is your primary residence. To do this, you may need to have been resident there for a certain period of time. Capital Gains Tax is applied to the increase in value of the property at a flat rate of 18%. The new rules do away with taper relief, although CGT remains payable however long you own the property. So, for example, if you buy a flat for £100,000 and sell it for £150,000, your gain would be £50,000 and you would be taxed on this. We recommend you seek good tax advice from an independent financial tax adviser or accountant
The buy to let lender ‘The Mortgage Works’ (part of nationwide Building Society), have a very helpful calculator that helps explain and display the change in tax liability for buy to lets over the coming years.
You can find the link here: See
Tax relief changes calculator – At the bottom of the list