Buy To Let Mortgages
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Thinking of becoming a landlord and entering the buy to let market? Our simple twenty step guide
can help you through the maze.
1. You can usually borrow a maximum of 80 per cent of the
value of the property, so this will determine your price range.
2. Get advice from a local estate agent about the
properties that are most likely to be let in the area and about
average rental yields.
3. Research mortgages and apply for an acceptance in
principle if you spot a suitable deal. You will need to produce
expected rental yields in addition to salary details.
4. Calculate the deposit you have available. Also budget
for buying costs such as surveys, fees and furnishings.
5. If the property is old, you should commission a
Homebuyer’s Report or a full structural survey. This is essential as
you will be responsible for maintenance.
6. Instruct your solicitor to carry out the purchase and
provide them with details of the property, estate agent, seller and
7. Your lender receives a valuation report and, if
everything is in order, agrees the mortgage.
8. Your solicitor carries out a local authority search and
confirms the legality of the title deeds. If all is in order, the
solicitor will draw up the contract and send you the legal
9. Pay the deposit, sign and return the contract and the
solicitor will exchange contracts and arrange a completion date. You
are now legally committed to the sale.
10. If the property is freehold, you must get adequate
building insurance cover in place from the time of exchange (before
11. Get quotes for any building or renovation work and
decorating that may be necessary.
12. On completion day call the seller’s estate agent to
pick up the keys. The property is yours to let.
13. Get the builders and decorators in as soon as you can.
Advertise for tenants just before the work is completed.
14. Arrange to meet prospective tenants and show them the
property once it is ready.
15. If you find suitable tenants, arrange for them to
supply you with employer, bank and personal references. Make sure
you check these and don’t take the house off the market until the
references are confirmed and a holding fee paid.
16. Get a deposit of one month’s rent to confirm the
tenancy. If the rent is to be paid by standing order, arrange for
this to be set up.
17. Make last minute preparations to the property to
ensure that it meets health and safety requirements and write a
18. Draw up a tenancy agreement.
19. Contact utility companies and the council to arrange
for bills to be transferred into the tenants’ names.
20. Get a month’s rent in advance on the day the tenants
move in. Ask them to sign the tenancy agreement and the inventory.
Hand over the keys.
Monthly cost per £1,000 of mortgage (excluding) any repayment
vehicle). Repayment figures assume a mortgage term of 25 years.
(Source: Halifax 5/2002)
For more information on buy to let mortgages or building a portfolio of investment
properties, please click here.