Thinking of investing in a buy-to-let property in 2015? Investment properties can offer a steady source of income or savings, and can be an excellent way to plan for a pension, but it’s worth doing your homework to ensure the buy-to-let route will be beneficial for your financial situation.
- Before you embark on a new property investment, speak to your family law solicitor and evaluate the risks according to your income, outgoings, lifestyle and long-term financial objectives. Can you afford to cover an additional mortgage? What kind of return will you need to make the investment worth your while?
- Do your research and clearly lay out the pros and cons of investing in a buy-to-let. Look at your budget and don’t forget to factor in the price of renovations and management, letting agent costs, legal fees, as well as a contingency fund in case of emergencies.
- Location is everything when it comes to making the most of a buy-to-let. Look into the benefits of different areas to maximise your return on investment – a great property doesn’t guarantee a profit, especially if it’s in the wrong location. Speak to local residents, agents and your solicitor to ensure you’re choosing the right place. Ideally you need rent to cover at least 125% of mortgage payments – can you afford to let the property lie vacant if you’re unable to find tenants right away?
- Shop around for the best mortgage deal – rates are dropping but they might not stay low for long. Use an independent broker or financial advisor to help you find the right buy-to-let mortgage for your needs.
- Before you make a decision, always take independent financial advice from an advisor regulated by the Financial Conduct Authority.
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