Struggling to find the best buy-to-let mortgage in York? speak to one of our buy to let mortgage advisers today
The term ‘buy to let‘ generally refers to either the practice of buying a property to be let for profit or to the type of mortgages used to purchase a property for such letting. Many countries, both in the western world and in the developing nations, have seen a surge in the growth of the buy to let property market in the last 2 decades and this has fuelled a growth in amateur landlords and the but to let mortgage providers who are keen to encourage and profit from them in turn. In addition, this growth has generated a lot of commerce in other related sectors such as buy to let insurance.
10 year fixed buy to let mortgage
Many countries, both in the western world and in the developing nations, have seen a surge in the growth of the buy to let property market in York the last 2 decades and this has fuelled a growth in amateur landlords looking for quality mortgage advice, this is why mortgage brokers in York who specialise in Buy-to-let are so important and the but to let mortgage providers who are keen to encourage and profit from them in turn. In addition, this growth has generated a lot of commerce in other related sectors such as buy to let insurance.
York Buy to let mortgages have been available in the UK since the mid-nineties and they are specifically designed for investors to borrow money to purchase property in the private rental sector. The amount that a prospective but to let investor can borrow is generally determined by the rental valuation of the property. The annual income for a rented property has to cover a certain percentage of the mortgage repayments, the Association of Residential Letting Agents (ARLA) states that landlords should seek to be able to obtain gross rent returns equivalent to between 130 per cent and 150 per cent of the rental property’s mortgage repayments, this takes into account the surplus rent to cover costs of property maintenance and slack periods when the property may be vacant of tenants.
York Buy To Let Mortgages.
Some buy to let mortgage lenders in York will lend you a maximum sum based on a multiple of your salary (usually a multiple of three) plus a percentage of the forecast rental income on the property. So if your annual salary is said 30,000 Franks and the forecast rental income is 10,000 Franks they will lend you 95,000 Franks. Other mortgages, in addition to factoring in your salary, will include any existing loan commitments you have, and then apply what is known as the ‘deduction rule’. This rule relates to the annual mortgage payments worked out at a pre-set level of interest.
Buy to let mortgage interest rates are generally fairly close to residential mortgage rates but will generally be slightly higher and typically charge higher fees. This is due to the fact that buy to let loans are considered by the financial sector to represent a greater risk than residential owner-occupier mortgages, and they generally are.
The Situation in the UK About Buy To Lets
The buy to let market literally ‘exploded’ in the York around the beginning of the millennium with rising property prices and the increasing availability of buy to let funding fueling a surge in would-be investors trying to cash in on the trend of the market. One reason for their popularity is the tax advantages that are available to the UK buy to let investors. Rental income is treated just like a salary by the Inland Revenue, and is therefore often taxed at 22% or even 40%. However, landlords are allowed to deduct costs from the taxable portion of their rental income, and these costs can include the interest of the buy to let mortgage repayments as well as maintenance costs on the property. These tax incentives made the buy to let market very attractive for both professional investors and amateurs looking to make the most out of their savings.
Would-Be Buy-to-let Investors
The market peaked around 2007 and now the market is saturated in many areas across the country with too many properties available to tenants. While buy to let is generally not a good idea for people who do not possess some extra budget there are a lot of remortgage deals which will fund a deposit for a home. If you are worried about losing money during void periods many companies will provide insurance which can deliver as much as six months mortgage payments in the event of a property in York remaining unoccupied.
You may still be lucky, and find a hotspot but you need to do your homework and the figures correctly. Buy to let trends differ from town to town and literally from street to street. Good advice for potential investors is to visit the local letting agents who should be able to tell you who is renting what at the moment so you can define your target audience. It could be students, young professionals or families, for example. Look for areas that do have a shortage of properties and for indicators that people will move there, such as new business developments.
Buy to let mortgage deals are still rife and the rates are almost as competitive as with conventional deals. The mantra with your buy-to-let must be ‘don’t expect to get rich quickly’. You need to look long-term: an absolute minimum of five years – but probably nearer to ten years.
Hello and welcome to Property InvestmentsUK and today we're going to be looking at a couple of client questions.
This one inparticular is looking at what areas maybe they should focus on around the Manchesterarea, if they're looking at both capital growth and also rental yield.
The question is from Raj and it's, "Dear Rob,I watched some of your videos and thought they were quite thorough and very thoughtprovoking indeed.
" That's alright, thanks Raj.
"I am looking to invest for yields andcapital gains in England.
Since house prices in London have soared, I started looking atthe Manchester area.
My budget is just below 200,000 pound in cash.
Would appreciate someadvice.
" Okay, perfect.
There's a few things to consider,Raj, in terms of which locations or what areas of Manchester you should consider.
For a budgetfor 200,000 pound, that's quite a healthy budget.
You'll get a lot of rentin the Manchester location for that, so what I'd probably suggest is instead of just thinkingon the headline amount is to look a little bit deeper in terms of what rental yieldsor what return, what cash flow, you're looking to achieve in the property.
Also, the trade-offthere for is what kind of capital growth you're potentially aiming for with the property aswell.
I can then guide you some more on giving youa bit of an idea in terms of what locations might fit, so if you're looking for a rentalyield of, say, 8%, there are only certain locations around Manchester that are goingto fit that criteria.
Likewise, if you're looking for a particular tenant profile, ifthat's working tenants or a local housing allowance tenants, or maybe students,again there will be locations or pockets around Manchester that will fit that criteria better.
So as a rough rule of thumb, South Manchesterat the moment is performing very well for capital growth and has performed very wellin the past as well and should continue to do that in the future, because a lot of reasonsbut there's investment going on in the area and with employment, business parks.
There'salso the metro-link, which is going through south Manchester at the moment and a few otherareas as well.
The yields, though, in south Manchester currently are only about 6, 6-1/2%.
When you compare that to other locations around Manchester, you might get 7, 7-1/2, even 8%plus in other locations.
It's important to try to strike that balance between growthand yields.
In south Manchester, you'll probably get more capital growth in the next 5 to 10years than in some of those higher yield, lower value locations around Manchester.
It's a case of trying to sit down initially,work out your kind of individual aims and goals.
What's your priority, whether that'scash flow and income coming in on a monthly basis, in which case yields are probably goingto be a bit more of a priority, or alternatively, if your potential is pension plan, growth,then maybe capital growth is an area you should be focusing on more and south Manchester mightbe a better location.
If yields are your target, then probably maybethe east, north and also west of Manchester are going to give you the slightly higheryields, so see which is most preferable for yourself, Raj, and then kind of look at theareas around there.
There's lots of other links that we can introduce you to at thebottom of this video as well which will show you how to work out the yields in the differentlocations across Manchester.
Also, how to check out which areas that may be performingbetter in growth and property prices as well.
Look to those in the videos, but hopefullyyou found that helpful.
Thank you for watching this video.
If youlike this content and you'd like to join our free online property training course, we'vegot a link for it on this page.
In there, we cover a range of different property strategiesto help you get started in building the long term property portfolio, or creating cash-flowingproperty business.
We also look at ways to increase your return on investment with anyof the properties you may be considering, and we also have a couple of cheat sheetsand downloadable documents in there as well.
Simply click on the link to join the freetraining course today.
What Are The Property Growth Areas Of Manchester?
Rental property management - should you usea letting agent or do it yourself? Managing your own rental property can sound appealingto some people when they first start out because they’ll know they will save on the lettingagent fees.
But you should consider whats involved and be honest with yourself and thendecide whether property management is right for you.
I have 3 questions that you can ask yourselfto see if you have what it takes to be an effective property manager, coming up.
Hi I’m Andy Walker from monoperty.
Com whereI blog online about my journey as a property investor and landlord, sharing what worksfor me and what doesn’t, to help you start or expand your property portfolio.
Now it’s true, letting agents do not haveany special qualifications.
Anyone can act as a letting agent.
But what they do haveor should have, are these 3 key areas which you need to check and decide as to whetheryou can deliver them yourself.
Do You Have The Knowledge? Do you know all the steps you need to taketo comply with the law and protect your asset? For example, securing the tenants depositin a Deposit Protection Scheme, checking that prospective tenants are eligible under theRight To Rent scheme if your letting in England.
And you need to be aware of any certificatesand any licensing for your area depending on the type of property and number of occupantsthat you will have.
A good letting agent will know the answers to all these questions andmore, and they will have systems that keep them update with both national and local lettingsrules.
Do You Have The Resources? For example tenancy agreements, guarantorforms, background checks for prospective tenants and membership with professional organisationsthat you can turn to for advice or if things go wrong.
As soon as the tenant moves into a property,they become the legal occupiers of that property.
And you don't want to give tenant's that legalright until you know that all background checks, contracts, deposits, and the first monthsrent is in place.
And the last question is, Do You Have TheTime? to run a rental property legally and effectively.
Are you willing and do you havethe time to take and respond to phone calls from your tenants at all hours of the dayand night? And can you handle co-ordinating all the maintenance? I think lots of inexperienced landlords makethe mistake of not putting value on their time.
They think they are saving money bymanaging their properties themselves, but they’re not getting paid for the time thatthey’re acting as a property manager they are simply just saving 5 - 12% on their income.
I would like to point out that if you do usea letting agent, you as the landlord are still responsible for the safety of your tenants,but by employing a professional agent, you will reduce the risk of anything going wrong.
There is risk associated with any type of investment, and I like to reduce that riskwas much as I can.
As a landlord, your aim is to provide an excellentservice to your customers, otherwise your customers are not going to stay for long.
If you don't have the time, knowledge or resources to serve your tenant, you will not be providinga good service.
If you have been able to answer yes to my questions and you have a passionfor property management, then brilliant, and I wish you all the best, but if your juststarting out, I don’t want you to think that property management is easy and thatit’s a good way of cutting back on costs.
Now, everything I have mentioned in this videocan be learnt.
So why not take one step at a time if your just starting out on your propertyinvesting journey? I was a landlord for over 8 years whilst I was in the Army and I useda letting agent because I didn’t have the time to manage my properties.
But I pickedthings up during that time and got a feel for what was required to meet the standards.
Once I retired from the Army, I reviewed my situation and decided to continue using aletting agent but I dropped the maintenance services.
If any repairs are required, theagent will now contact me and I will decide whether I take it on or I give it back tothem.
Letting agents typically charge an administration fee for arranging any repairs or any maintenanceand issuing of any certificates so I decided to take that on and save on some of the costs.
Before I finish there is one piece of goodnews, and that is if you do use a letting agent, all their fees are tax deductible.
If you have any questions about property management,please leave a comment down below and if this is your first time visiting this channel definitelysubscribe so you won’t miss any of my future videos that will all be geared towards helpingyou, start or improve your property business.
Thank you so much for watching, please likeand share this video if you found it useful and I will see you soon.
and you don’t want to give tenants …….
argh! which you need to be aware of ….
argh! and … huh (exhale).