Buy to let

If you need to sell the property for a loss, the sale price might not cover all that you owe on the mortgage. You would be required to make up the difference.

If your tenants leave, and there is no rent coming in, you still need to make your mortgage repayments.

Once a property is purchased there are potentially two ways of earning a profit:

• Rental yield – what your tenant(s) pay in rent, minus any maintenance and running costs e.g. repairs and agent fees.
• Capital growth – the profit you earn if you sell your property for more than you bought it for.

To access your money that is tied up in a property you will need to sell the property or take out another mortgage. Both take time. A new mortgage would need to be approved by the bank.

Running costs and maintenance expenses are associated with any kind of rental home. If you choose to use a sales or letting agent they will also charge a fee, but may save you time overall. If you consider using an agent compare a few costs to be sure you get the best deal.

Consumer protection that covers most investments do not apply to buy-to-let properties.

This means it’s vital to find out everything you can and plan ahead before you commit to purchasing a property and a mortgage.

The size of your deposit determines how much money you need to borrow. On an outright sale you normally need at least 10% of the purchase price as a deposit. But if you’re buying with shared ownership it can be even less as you only pay a deposit on the share value.

You can find out more about mortgages on the Money Saving Expert website. 

As well as the price of your home, you may have to pay for a range of things related to your home purchase and move. These can include:

• mortgage reservation fees
• surveys, valuations and local authority searches
• stamp duty and a land registry fee
• ground rent and service charges