Buy-to-Let Mortgages

Unless you can buy a property outright, you will need to raise the cash by taking out a mortgage with one of the increasing number of lenders who offer buy-to-let loans. These are just like a mortgage you take out to buy your own home, except that:

1. You will usually need to put down a deposit of between 20% and 25% of the value of the property.
2. You may have to pay slightly higher interest rates then you would if the loan was for a home to live in, although at the present time increased competition in the buy-to-let loan sector is bringing interest rates down.
3. The mortgage payments, together with other expenses involved in letting the property, can be deducted from the rental income, which reduces the amount of the income on which you have to pay tax.
4. The size of mortgage a lender will allow you is based not on your personal earnings but on the expected rental income for the year.

You can use an interactive calculator, found on many web sites, to work out how much money you may make both in terms of rental income and the likely profit from the eventual sale of the property.