Thinking about Buy-To-Let? Read this first
If you’re thinking of becoming a landlord – using your commutation to buy an investment property or moving in with a new partner and planning to rent out your own property – read this first!
If you're thinking of becoming a landlord - perhaps you're planning to use your commutation to buy an investment property or you've moved in with a new partner and intend to rent out your own property - there are some important things to think about first.
- Tell your mortgage lender - they need to have given you formal 'Consent to Let' or you'll be in breach of your mortgage agreement. You may be put onto a Buy-To-Let interest rate, which tends to be higher than a residential mortgage rate. The loan-to-value (LTV) is also generally lower.
- Speak to a surveyor - your affordability for a Buy-To-Let mortgage is assessed differently from a residential mortgage. Income is assessed as a percentage of your mortgage payment, usually at least 125%, so if your mortgage payment is £700, you'll need to attain rent of at least £875, which would need to be confirmed by a surveyor.
- Tell your insurer - your standard Buildings and Contents insurance will not cover you if the property is let out, so you'll need specific Landlord's Insurance.
- Speak to a letting agent - they can help you set yourself up as a landlord and help with the management of your property, but you'll need to pay a small fee for this.
- Taxes - Stamp Duty has to be paid on the purchase of any property worth more than £125,000 regardless, but you may also have to pay Income Tax on the rent you receive and Capital Gains Tax when you come to sell the property. You must state rental income on a Self-Assessment Tax Return but you can take off costs like mortgage interest and letting agency fees from the rent before you declare it.
- Consider running costs - if you decide to let out your property, the day-to-day running costs don't end with the monthly mortgage payments. You should also consider maintenance costs, annual safety checks, Landlord's Insurance and Rent Insurance.
If you're thinking of buying a property to let or letting out your current home, speak to our friendly team of mortgage advisers. They can search the whole of the mortgage market to find the most suitable deal for you - including exclusive deals for the Police family that are not available elsewhere.
Your property may be repossessed if you do not keep up repayments on your mortgage.
For members, Police Mutual provides free mortgage advice and receives a commission from the mortgage lender which we use to fund this service. The fee payable by non-members is £300 but this will be waived if you take out any Police Mutual Group product during the process.