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.
What Is The Best Way To Work Out Rental Demand and Supply?
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.
Property Management | Finding A Letting Agent For Your Buy To Let | Real Estate Investing Tips
If you're looking at buying an investmentproperty to help supplement your pension in the future should you be looking for a propertyor real estate investing mentor? It’s an interesting question and I’llgive you my thoughts right after this Hi I’m Andy from monoperty.
Com and on thischannel I share the lessons I have learned as a property investor and landlord and Ialso interview other investors so we can learn from their advice too so if you're new hereconsider subscribing for more videos like this And so if you're a beginner looking to investwhilst you're in full time employment to help supplement your pension in the future I wouldn’tworry about finding a mentor.
What!?! Hear me out There are people who charge thousands or tensof thousands for mentorship programs.
Now I know if you want to go big having amentor can accelerate your progress and help you avoid the pitfalls but I think that’ssomething to think about once your involved and you've got a taste for it and you enjoyit and you want to take it to the next level.
Also I believe there is added value if youhave some experience before seeking a mentorship because you'll have some knowledge that youcan base your questions on and you won’t be spending your money on just learning thebasics which you can get for free online or from books.
Of the 2 million landlords in the UK the majorityof them are what’s known as accidental landlords.
It’s how I started out.
These people find themselves in a situationwhere they are unable to sell a property for various reasons due to an inheritance, movingjobs, or they let their property because they are living away from home for long periodsof time with their work.
Rather than selling they look to let theirproperty through a managing agent so it’s one less thing for them to worry about.
And the majority of people do well from thiswith very little effort, their running costs and overheads are covered each month and astime passes they gain some capital growth.
I know this because as an accidental landlordmyself I’ve been there.
If you are actively looking to invest, youare going to have a better start than the accidental landlords, who are already doingwell, because you have taken the time to learn.
The accidental landlords are making the bestout of what they already have, whereby you, the active investor, will be seeking a certaintype of property in a specific area that is in demand.
Buying your first buy to let can be done withoutany guidance at all, and you will find that you’ll receive some direction from the estateagent, mortgage broker and solicitor during the process anyway.
You already have enough to do on your to dolist; find a deposit, find a mortgage broker, research an area, conduct viewings, crunchthe numbers and find a managing agent ……, so if finding a mentor is on that list, you canscratch it off and have one less thing to do.
Don’t over think it and make it more difficultfor yourself.
I did very little research on my first buyto let, I listened to what the estate agent told me, the mortgage lender was happy tolend to me once they had done their valuation and it worked out well.
Now could I have increased my return on investmentif I had known and done more at the time, well of course I could BUT, at least I madea start.
There is a danger of over thinking the processwhich will delay you from buying your first investment property.
Don’t spend too much time thinking aboutgetting the biggest returns, property investing is NOT a get rich quick scheme.
It’s a long term game, but you have to makea start! Making a start now on a property that producesa positive net cashflow each month, is better than waiting months or years for a propertythat produces a slightly higher net cashflow.
We all know the best way to learn is by doing.
So if you're in a position to buy, get started! Now let me tell you, the fact that you arewatching this video, and if you’ve seen my Getting Started Playlist which I will linkin the description and throw a card up on the screen just in case you haven't, you willalready be way ahead of other people who are considering investing, and those falling intoinvesting as an accidental landlord, in terms of preparation and finding a good propertythat’s in demand on the rental market.
So don’t think you need to find yourselfa mentor.
When starting out, spend your money on aninvestment property, NOT a mentor.
You’ve got this! You can do it! This weeks question comes from Michael Collinson:”“Well done with the new look I like it” Thank you very much Michael.
“What video editing software do you use? I’ve just started using Power Director 14.
Do you use a green screen to get yourselfshowing in front of the background? I use a Mac and the first video editing software thatI used was iMovie the first 25 or so videos I released were edited on iMovie I then decidedto upgrade to Final Cut Pro (or FCPX) Final Cut Pro 10 and I love it it’s brilliantthere is so much more you can do with that compared to iMovie and I’m learning allthe time everytime I create a video I try and learn something new try and add somethingso we will see how that goes.
Yes I use a green screen and this is somethingelse I’m learning all the time you have to get the lights right the camera settingsright it can be a pain at times but I wanted to use it because I don’t have a plain wallin my house every walls got a picture, a photo, a mirror, or a clock on it and I didn’t wantanything in the background that would distract the viewer so that’s the main reason forusing green screen but it’s also good because I can throw up graphics or other bits of informationwhile I’m still doing the talking head stuff in the hope that it will just add to the videoexperience so yep that’s why.
I buy all my equipment on Amazon because Ifind their prices are very competitive and their Prime service for next day deliveryis fantastic.
I have upgraded some kit over time I’vegot a new camera stand a new green screen some other bits and pieces and I’ll linkto everything I’ve purchased and would recommend down in the description so that you can checkit out for yourself.
Thanks for your question Michael and keepup the great work on your channel I’ll link to it down in the description so that otherpeople can visit it and if you have a question that you would like me to answer you can askme in the comment section below or send me a message on my social media platforms orthrough my blog.
Please like and share this video if you foundit useful and if it’s your first time here definitely subscribe so you won’t miss anyof my future videos which will all be geared towards helping you start or improve yourproperty business.
Thank you so much for watching and I’llsee you in the next video.
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