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Buy to Let

A buy-to-let mortgage is a type of mortgage designed for people who want to buy a property with the intention of renting it out to tenants. Buy-to-let mortgages are structured differently from traditional mortgages used to purchase a primary residence with 3 main differences:

The 3 main differences are:


1. Rent Potential – the decision as to whether a mortgage will be offered is usually based on the rent you will earn as well as your income. In some cases, your income is not considered.

2. Interest rates on buy-to-let mortgages may be higher than those on traditional mortgages.

3. A larger deposit than traditional mortgages is required - typically around 25% or 30% of the property's value.  

When buying property to let, you will need to decide whether your primary objective is income or capital growth. In other words, are you looking to make a profit month on month or are you looking to make a profit through increased equity from the property if it increases in value over time?  

Purchasing a buy-to-let property can reap considerable financial rewards over time but it is important to factor in other costs involved as well as potential risks and complications. 

Some common costs to consider include: 

Property maintenance and repairs:

As a landlord, you are responsible for maintaining the property and ensuring that it is in a habitable condition for your tenants. This may include repairs and regular maintenance tasks, such as cleaning gutters and servicing boilers. 

Property management fees:

If you choose to hire a lettings agent to oversee your rental property, you will need to pay their fees. Letting agency fees vary, but they typically range from 5% to 10% of the monthly rent. 


You will need to take out landlord insurance to protect your property and contents from damage, theft, and other risks. The cost of landlord insurance depends on various factors, such as the location of the property, the value of the contents, and the level of coverage required. 

Utilities and services:

You may be responsible for paying for utilities such as water, gas, and electricity if these are not covered by your tenants. Other costs may include council tax, TV licence, internet, and phone services. 


You will need to pay income tax on the rental income you receive from your property, as well as any capital gains tax if you sell the property at a profit. You may also need to pay stamp duty and other taxes when purchasing the property. 


When choosing a property to let, it is recommended that you take advice from local letting agents to determine the type of properties which are in demand and the most sought-after areas. 

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