If you are looking to buy a property to rent out, as a long term investment, then you will need to obtain a Buy to Let mortgage rather than a standard residential mortgage.
Buy to Let mortgages are normally seen as a higher risk by Lenders and therefore you will usually need a bigger deposit of between 20%-40% of the purchase price.
This is because, as a Landlord, you could encounter issues in collecting rent or the property may be empty for a period of time, which could affect your ability to pay the mortgage payments each month.
Lenders will typically need your rental income to be 25%-30% higher than the mortgage payment payable from you.
Because of the higher risk, Buy to Let mortgages usually involve higher fees and usually a higher rate of interest.
Most Buy to Let mortgages are offered on an interest only basis. This means you would only pay the interest due on the mortgage each month.
At the end of the mortgage term you would be required to repay the full balance of the mortgage. Therefore you would need to ensure you have made adequate financial arrangements in place to repay the original debt.
We offer high quality advice throughout the transaction allowing you to make informed decisions.
We can also offer advice on stamp duty implications. If you own another property already then you may be liable to pay the additional 3% stamp duty rate on top of the current stamp duty rate for any property worth over £40,000.00.
Contact our teams in your local branch for further legal advice on buying a buy to let property - Sheltons Solicitors have branches in Bulwell and Hucknall.
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