afford a buy to let mortgage

Can I afford a buy-to-let mortgage?

First things first, you need to be able to afford the mortgage on your own home comfortably, and only then should you consider borrowing a big loan for another property. Often, you will need to own your home to be allowed a buy-to-let mortgage.

There are many aspects to take into consideration if you intend to take out a buy-to-let mortgage. Would you be able to cope with repayments if your tenants were unreliable, or if the property was void for a period of time?

House prices and rents increase and decrease each year too, so you need to be prepared for this. Avoid making the mistake of assuming you can just sell the property to repay the mortgage, because if house prices fall, you could be stuck having to make up the difference if the property doesn't sell for as much money as you hoped.

The key part of buy-to-let is receiving enough income each month from rent to cover the mortgage payments, so you need to give this proper attention, and come up with a contingency plan in case you don't receive rent payments.

Calculate the fees and taxes involved

Calculate the maintenance costs, and check the tax to ensure you don't suddenly end up with extra costs you hadn't expected. Stamp duty, income tax and capital gains tax are all potential outgoings to consider.

Buildings insurance is required if you're letting your property, and if it is furnished you must take out contents insurance too.

Don't forget about legal fees and letting agent costs, if you decide to go down this route. Letting agents can make life easier in that they handle the day-to-day dealings with tenants, which actually takes a lot more time to do than people expect, but obviously this adds to your outgoings.

Remember, if you do not keep up with the repayments on your house, then it may be repossessed.



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