Where does the return come from?
• Rental yield – this is the money coming in from your tenants. You will have to deduct management costs, repairs and agent fees from this.
• Capital growth – the amount you earn if you sell the property for more than you bought it for.
The differences between a buy-to-let mortgage and a residential mortgage
Residential mortgages are designed for regular home owners. Therefore, they come with legal protections and regulations designed to lessen the risk of people losing their homes. All mortgage lenders must follow the same rules, from the very start of the process through to it either being paid off, or at worst, the property being repossessed.
New to buy-to-let?
If this is your first investment in a buy-to-let property, then it’s good to be very clear on the responsibilities you have as a landlord.
The National Landlords Association website is a great source of information.
How much rent can you charge?
Be aware that rents cannot be guaranteed and the amount you can charge is subject to external factors not under your control.
The amount you can charge will depend on the area, other rentals nearby, wider market trends, and the general state of the economy.