Lettings
One of the most lucrative ways for a passive income is property investment. Like any other investment, there is no guarantee for success but as long as you do it right, there is a success.
Buy-to-let property is one of the most common types of property investment that you have already heard about. It offers investors an array of benefits.
What is a buy-to-let property?
Buy-to-let property is purchased for the purposes of renting it out to make a rental return and income stream. This will allow you to get a generous income and capital appreciation in the future when you sell.
What to expect with the buy-to-let property?
When you plan to buy your buy-to-let property, you’ll need to consider planning how to finance your purchase.
In the 2016 ruling regarding additional properties, investors are required to pay at least 3 percent stamp duty tax for properties up to £125,000.
With the recent tax changes and the cost of buy-to-let mortgages higher than standard mortgages, it is more essential than ever to work out the expenses. So, if the price of the property is higher, then expect a higher interest.
Moreover, finding a buy-to-let mortgage is not always easy. There are different lenders available and also they offer different terms. Usually, in order to get a buy-to-let mortgage, the rent that you are going to charge should be at least or more than 125% than the mortgage repayment. Thus, if your mortgage repayment is £900, the rent should be at least £1,125. Moreover, the rental charge should be able to cover the buy-to-let mortgage and other general expenses. Because like any other business, you will need to pay for the income rental tax. And there are also expenses such as insurance, repairs, letting agent fees, etc.
With a buy-to-let mortgage, you’ll be looking to borrow at most 60 percent to 75 percent of the value of the property. With a higher deposit, you’ll be able to unlock a better deal for a buy-to-let mortgage.
So, it is important that you should research well.
Although the buy-to-let has been hit with recent charges, buy-to-let is still popular because the popularity of property as an investment has increased. Also, the UK is still growing, which means there will be a need for more housing.