Category Archives: Investment

5 Reasons to Include Airport Parking in Your Investment Portfolio

Posted on by Aspen Woolf

As any successful investor will tell you, sometimes you have to think outside the box in order to get the best return on investment. One such opportunity that is currently attracting the attention of investors across the country is, wait for it, airport parking. Yes, that’s right, parking spaces in some of the country’s largest airports are now up for grabs, and they look certain to become another part of many an investment portfolio as their popularity rises.

So, what is the big attraction in putting your money into what is essentially a strip of tarmac? Here we take a look at five reasons why airport parking is certainly worth more than just a cursory glance next time you are thinking of diversifying your investment portfolio:

Airport

1. Low entry cost
One of the most appealing aspects of this type of investment is its low entry cost. When compared to many of the other opportunities currently available to those who are looking to find another way to put their money to work, airport parking performs favourably. With prices starting from just £20,000 airport parking offers even the smallest investor a viable opportunity for significant gains.

2. Guaranteed yield for the first two years
Unlike many other investment opportunities where you roll the dice and see where they land, investing in airport parking is a sure thing – for the first two years at least, after which yields are projected to grow. A yield promising 8% net is not to be sniffed at and many investors are taking advantage of what can only be described as a safe investment.

3. Extremely high demand
If you are worried about the potential performance of your investment past the two-year mark, you needn’t be. Demand for parking spaces in all of the UK’s major airports is very high indeed and the projections for air travel going forward look extremely positive too.

According to the International Air Transport Association, global air travel looks set to double over the next 20 years and the UK is expected to have over 150 million more Origin-Destination (O-D) passengers by 2034.

4. Lower volatility
Investments such as this offer those who wish to put their money in a more secure and stable opportunity the chance to do, bringing some balance to what may otherwise be a risk-heavy portfolio. By diversifying your options, you are effectively spreading the risk should anything happen in the other markets that hold your cash. This is a prudent measure, especially with the increased volatility we have been witnessing across the world’s stock markets of late.

5. Relative passivity
Another thing that will be extremely attractive to many investors is the fact that investing in airport parking is a relatively hands-off investment. This hassle-free opportunity will suit those who simply want their money to work for them without the aggravation of wheeling and dealing in markets they may be unsure about.

Car parking

Added Bonus:
And as an added bonus, airport parking is relatively free of possible tenant damage. When it comes to housing, any tenant can accidentally set fire to the property, cause water damage, have parties that can really sky rocket wear and tear costs, etc. Whereas in airport parking it’s almost impossible for any of that to happen. So you can rest easy at night knowing that your investment will sit safely.

There you have it, five good reasons why airport parking has a future as a solid investment opportunity across the United Kingdom. Do you think it’ll take off?

If you liked this post why not read our other posts: Gatwick Airport Parking Scam Notice and A Guide To UK Property Investment in 2016

Gatwick Airport Parking Scam Notice

Posted on by Aspen Woolf UK

An Airport Parking Scam Notice to Our Investors

Property investment can be hugely rewarding, but as with any type of investment, it carries a degree of risks as well. This is why hugely popular and successful investments can all of a sudden be imitated by the wrong people, as they see it as an easy opportunity to make money.

Aspen Woolf feel we would not be doing our job properly as a trusted investment company for over 10 years if we didn’t raise awareness on the current scams out there.

Recently it has come to our attention that there have been fraudulent rogue agents selling UK Airport Parking Spaces to investors. We would like to keep any future investors and our treasured current clients knowledgeable about this so they too can help keep themselves and those around them safeguarded.

We have found out that there are scam companies claiming to be selling Gatwick Airport Parking Spaces as well as Glasgow Airport Parking Spaces, without being accredited agents by the developers.

Park First, which is the true developer of Airport Parking Spaces in the UK is also aware of this and have issued their own notice on their website, which you can read here.

We would like to add our own Airport Parking Scam Notice to help keep everyone aware and to hopefully avoid any future disappointments. Aspen Woolf takes great pride in our customers’ successes as they directly attribute to ours. This is why we take this matter very seriously.

Firstly, please keep in mind that Park First will always confirm their official agents, of which Aspen Woolf is one. You can at any time get in touch with Park First to confirm an agent is accredited. You can do this by contacting Ruth Almond directly either via email (ra@groupfirst.co.uk) or telephone 01282 330 33.

If at any point you feel a company is trying to keep you away from being in touch with the developer, or gives you the impression that the developer can’t be reached for whatever reason, we would suggest not being in further contact with them. An official agent for UK Airport Parking Investments through Park First will always be transparent about the product and the developer. Please feel free to ask for proof of affiliation and/or being an accredited agent.

Secondly, we would like to give some tips to everyone on how to avoid future investment scams of any nature.

Great Tips on How to Avoid Investment Scams

Investment scams are designed to look like genuine investments. It is always important to do your own research and due diligence. Please feel free to read through some official tips on how you can spot and avoid a scam here. And for our overseas (U.S.) investors you can find some really great information from investor.gov. Please help yourself to the vast information on offer and help keep others aware of current scams.

Investing is the act of putting money, effort, and time into something to make a profit or get an advantage. Please keep your investments safe by keeping yourself and those around you informed. Feel free to share this notice with anyone you believe would benefit from learning more on how to avoid future investment scams or to simply make them more aware of the current UK Airport Parking Scam.

Devotedly,

The Aspen Woolf Team

 

To keep up-to-date on the most current property investment news, or to find out more about investing in general, please visit our News Section.

The Soaring Assets of The UK’s Richest Property Investors

Posted on by Aspen Woolf

The Estates Gazette Rich List for 2015 has once again shown that, for the world’s financial elite, the UK property market continues to be an extremely popular investment choice. Despite ongoing uncertainty in other areas of investment, British bricks and mortar remain in demand amongst those with the most to lose.

The list shows the world’s 250 richest people who have property investments within our shores and the story that it tells is an astonishing one. Over the last year, the net worth of the individuals included on the list jumped by 40 per cent to more than £300 billion. This is the largest year-on-year increase since the list began back in 2002, and the incredible statistics do not end there.

This year’s list included 60 billionaires amongst the 250, a six-fold increase on the 10 included in the 2009 list published by Estates Gazette. This jump is a further indication that the UK property market is widely regarded by the world’s wealthy as the place to invest, and it´s hardly surprising when you look at the volatility elsewhere at present.

Who fills the top three spots?

The top three places in this year’s list are as follows:

Amancio Ortega

Once again, it is the Spanish billionaire Amancio Ortega who heads the list. The man behind the high street fashion chain Zara has increased his property investments across London considerably over the last few years, and the results are plain to see. Ortega’s wealth has soared from £35.8 billion in 2014 to a staggering £46.7 billion this year.

His portfolio includes the former home of the Duke of Devonshire – Devonshire House on Piccadilly in the heart of London’s West End – which has since been turned into an office block for hedge fund investors. Other notable properties include a £400 million development in what is possibly Britain’s most famous shopping area, Oxford Street, which houses the budget fashion giant Primark’s flagship UK store. Overall, Mr Ortega’s portfolio is now worth in excess of £5.32 billion.

Wang Jianlin

Wang Jianlin takes the second spot on the list with a personal fortune of £22.7 billion. Mr Wang, owner of the entertainment and real estate conglomerate Wanda Group, is China’s richest man and his position in the Estates Gazette Rich List has risen from sixth place last year.

The reason behind the rise in the rankings becomes clear when you see that Mr Wang’s wealth has jumped from £8.7 billion in 2014 to a remarkable £22.7 billion this year. The Wanda Group is behind the One Nine Elms development in London’s Vauxhall, bringing much needed regeneration to an area of London that has been neglected for some time.

Ernesto Bertarelli

Third place on the list is reserved for the pharmaceuticals heir, Ernesto Bertarelli. Bertarelli has maintained his position from the 2014 list thanks to his ownership of Crosstree Real Estate. Part of his £10.2 billion fortune is Crosstree’s portfolio, which includes prestigious London Mayfair sites in Berkeley Street and Dover Street.

With the top three spots on the list all taken by foreign investors, it’s clear to see that the world’s wealthiest people still regard the UK property market as one of the safest investment choices available. And, if you are looking for a shrewd bunch of people to get an inkling of where your money should be heading, you could do a lot worse than to follow this group´s lead.

If you enjoyed this blog post then perhaps you might like to read “Will The Buy-To-Let Market Still Be Successful In 2016?“

UK Inflation Is Negative Again, What Does This Mean To Investors?

Posted on by Aspen Woolf

Inflation in the UK – as measured by the Consumer Price Index – has once again gone into negative territory, but what does this mean for investors? The CPI rate has been pretty steady at, or close to, zero for much of the year, but now that the figure has gone below that level it’s natural for property investors to question exactly what it means for them.

What is negative inflation anyway?

Before we can explore what negative inflation means for investors, it is vitally important to explain exactly what the term means before we proceed.
Negative inflation, or deflation as it is sometimes referred to, is a macroeconomic condition in which a country experiences falling prices. As the name would suggest, it is the opposite of inflation, which is where rising prices are the predominant force.
One common mistake that many make is to confuse deflation with disinflation. Disinflation is simply a slowing of inflation rather than the drop off experienced when deflation takes hold.

Surely lower prices are good?

Well, this all depends upon which side of the fence you are sitting. Certainly, for the average consumer, money will seem to go a little further as food and petrol prices decrease, but for the investor things can be a little different. While they too will enjoy the lower prices at the pumps and tills, lower prices mean lower takings. So, for those invested in the stock market, decreased company profits could hit their portfolios hard if the period of negative inflation becomes prolonged.
Other economic factors begin to show too if deflation continues for too long. Things such as excess supply can push companies to slash prices further and take cost cutting measures across the whole firm. Wages, lower recruitment, reduced production budgets, lay-offs, and even closures can all follow a lengthy spell of deflation.

What does this mean for property?

Picture of a House
Naturally, if this scenario was to occur, property prices could be affected too, but the likelihood is that the property market would be one of the last areas to take a hit. For house and flat prices to take a tumble there needs to be a glut of property on the market, and the current demand in most of the country should negate any early effects of deflation.

It’s also worth bearing in mind that for the vast majority of homeowners, their property is where they live so it is unlikely that they will be selling up unless they are in a position to downsize to raise some capital. Even property investors will only be forced into selling off their portfolios if other circumstances, such as a fall off of renters or loss of a full time job, dictate.

The outlook for the UK property market – at the very worst – looks relatively benign for the time being. The Bank of England is under no pressure to raise interest rates and the CPI figure is expected to climb over the coming year as the recent huge drop in petrol prices begins to fall away from year-on-year calculations.
While it is essential to keep track of where the inflation rate goes over the next few months, those who have chosen to invest in the UK’s property market can sleep fairly soundly for the foreseeable future at least.

If you find investing still on the top of your to-do list in 2016, then it might be worth checking out our quick post on if The Buy-To-Let Market Will Still Be Successful in 2016.

Why Student Property Is The Most Popular Type of Investment in The UK

Posted on by Aspen Woolf

Residential buy-to-lets may have been making all of the headlines in the national press recently, but it is student property that has been the investment of choice for many over the last decade or so. Shrewd investors have been building portfolios chock full of student properties, and that trend looks set to continue as we move forward into 2016.

So, what makes them such a draw for those in the know? Let’s examine why this kind of acquisition has struck a chord with so many for so long.

student property investment uk

Image credit: NEC Corporation of America

Demand is high

Put simply, there isn’t enough high quality property on the market to meet the ever-growing demand, and that demand shows no sign of diminishing any time soon. One of the main reasons why the student property market is expected to remain strong over the coming years is the removal of the cap on the amount of places universities can offer students.

Money is already being injected into campuses across the country so that these seats of learning can expand their capacity and open their doors to greater numbers of students; the vast majority of which will all require accommodation while they carry out their studies.

international student property

Image credit: Matt Cline via Flickr

International enrolment figures are rising, too, and these overseas students will also add to the demand that the supply simply cannot meet at present.

Student property is remarkably stable

Every investment has an element of risk attached to it, but student property does seem to ride out market blips far better than any other type of investment available today.

This section of the property market has steadily increased over the last decade, a time frame which includes what many considered to be the greatest recession the world has seen in a generation. While pensions and stock exchanges floundered, the student property market kept on rising, regardless of what was happening elsewhere.

upwards arrow

Image credit: Ian Muttoo via Flickr

Growth is forecasted to continue, too

The rise in investment across the first half of 2015 within the student housing market tells us that confidence is high in this sector. £1.5 billion more was spent this year than during the same period in 2014, bringing the total investment value up to an astonishing £3.98 billion.

This kind of conviction in the student property market is fuelled by the perception held by many investors that the residential buy-to-let market may be slowing. This belief, while as yet unsubstantiated, is largely due to the changes in taxation brought in by the chancellor in both the main and mini-budgets this year.

property investment growth

Image credit: Tax Credits via Flickr

Parental guarantors ensure that you’ll get paid

As demand for property is so high, it really is a landlord’s market. This means that many of those seeking decent accommodation are willing to go the extra mile to ensure that they land the property they want.

Parental guarantors are not unusual in the student property market these days, and there have even been multiple instances of landlords being offered full payment up front to secure a property. This kind of security can make all the difference to a landlord, especially one who is relatively inexperienced with maybe just one or two properties within their portfolio.

parental-guarantors

Image credit: brad via Flickr

When you take these factors into consideration it is easy to see why the smart money has been going into student property lately. Furthermore, we can’t see any reason why this section of the property market will not continue to perform well over the coming months and years.

If you enjoyed this blog post then perhaps you might like to read “Is Student Property The UK’s No 1 Investment?”

Feature image credit: My Make OU via 123RF.com

Smart Investments – Yields Across UK Student Lets [Interactive Infographic]

Posted on by Aspen Woolf

Student property is arguably one of the safest and most sought after type of property investment. With international students alone contributing £10 billion towards our economy it’s hard to ignore the benefits of investing in student properties. With this in mind we have created an interactive infographic to show you the investment yields for student lets across the UK from 2014-2015. The areas we cover in this infographic (from top to bottom) are Glasgow, Edinburgh, Newcastle, York, Leeds, Manchester, Liverpool, Sheffield, Chester, Birmingham, Cambridge, London, Bristol and Southampton.

You may notice that this leaves us with 3 additional plus signs, that’s because we’ve also added in the % increase in entry rates from 2006 to 2014 for the UK plus the 10 best and 10 worst buy to let hot spots based on their rental yields. If you’re still not sure about investing in student property then why not have a look at our previous infographic called “Student Property Investment“, it details both the growth of the property market as well as the growth in both international and mature students.

So why not have a play around with our interactive infographic? Just click the play button to get started.


The Advantages Of Off-Plan Investments

Posted on by Aspen Woolf

Many investors swear by buying property off-plan as opposed to waiting for the property to be developed, but why would that be the case? Surely, there is a certain amount of risk involved in purchasing something that currently only exists on a few pieces of architectural paper? Why do so many investors evangelise over off-plan?

This article aims to shed a little light on the subject of off-plan investments, and why they prove to be so beneficial to a great deal of property investors.

Forecasting is fundamental to success

The first thing we need to discuss is the importance of good forecasting when buying a property off-plan. Regardless of the other benefits – and there are many – without a good idea of what the local property market is doing in the area you wish to invest in you will be flying blind.

property investment forecasting

Image Credit: Rachel via Flickr

If, however, you do your homework and find that growth is expected in the short term, you can often find that by the time that the property has been built you will already be in profit.

This is why new developments up and down the country all have property boards up within the first couple of months of completion. Investors are offloading early. It’s not because people have purchased a brand new property and changed their mind within the first few weeks of living there!

While you can indeed buy off-plan and not sell, the importance of forecasting is about increasing profits. Why buy something off-plan if prices are set to dip in the near future? Be aware of your market.

More time to plan

A huge advantage of buying a property off-plan is the breathing space it gives you when it comes to planning how best to make your investment work for you. Buying an existing property means that everything needs to be in place right from the get-go.

sale pending sign

Photo Credit: Dan Moyle via Flickr

Tenants need to be found almost immediately and the first contract you enter into may be a somewhat rushed affair. The pitfalls of this are obvious, and they are especially easy to fall into if you are new to the property investment game.

Greater control over the end product

As you are buying the property before the first brick has been laid you will, in most instances, have greater input into how the property looks when completed. You can make changes to the décor and add extras such as better quality fittings and white goods, all of which will help increase value and demand for your property when you come to rent or sell it in the future.

Get the pick of the plots

New developments, as with many existing estates and even streets, will have better areas than others. By opting to buy off-plan, you will be amongst the first to choose whereabouts you want your property to be rather than having to fight it out with everyone else when the building work is finished.

house construction

Photo Credit: Concrete Forms via Flickr

Things such as parking, access to shops and transport, and proximity to playgrounds and gardens all affect how prospective buyers and tenants will view your property, so buying off-plan can have real advantages in this regard.

Why isn’t everyone buying off-plan?

It’s a great question, as the advantages seem to point towards off-plan being a huge benefit to buyers. While this is certainly the case in many instances, investors should be aware that while buying off-plan is often beneficial it is not the easiest route for all to take.

The main reason for this is the banks reluctance to lend on off-plan properties. Why this should be the case is a question for the banks, but the fact remains that many lenders simply won’t offer you a mortgage or a loan for off-plan purchases.

investing in off plan property

Image Credit: Martin Reynolds via Flickr

This means that to take advantage of the advantages, as it were, you really do need to be a cash buyer in order to get in early and make the most of your investment opportunity. That being said, if you can stump up the cash, buying off-plan can be very favourable for those who are looking to put their money into the property market.

If you enjoyed this blog post then perhaps you would enjoy “A Guide to UK Property Investment for 2016“?

Feature image credit: Jeff Djevdet via Flickr.

Property Investment Set to Increase on Isle of Wight

Posted on by Aspen Woolf

Investing in bricks and mortar has long since been a trusted source of income for many mainland UK based investors, but now it seems as though residents of the Isle of Wight are all set to get in on the act too. Where savings accounts have been (and still are, for the time being) the number one choice for those with some spare cash on the Isle of Wight, things are starting to change here.

Property giant Barratt Homes recently reported an increase in interest in the market, with 43 per cent of people saying that they would consider putting their money into property if they had upward of £25,000 to invest. This figure was bolstered by the fact that, of those surveyed, over half said that they consider investing in bricks and mortar to be a better bet than taking a punt on the stock market. And with the recent volatility seen in stock exchanges across the world, who can blame them?

Why the change in attitude?

islse of wight beach huts

Photo Credit: Ronald Saunders via Flickr

This dramatic change of heart from Isle of Wight residents could be due to any number of reasons. However, chief amongst those is likely to be the recent changes that have been made to the pension laws here in the United Kingdom.

4.5 million people across Britain who have Defined Contribution pension schemes can now get hold of their money from the age of 55 to do with as they please. Even those with Defined Benefit pension schemes in place may have the option to swap over to a DC pension should the necessary criteria be met, increasing the number of people able to access the pension pot further still.

isle of wight shore

Photo Credit: Ronald Saunders via Flickr

With this access to ready cash, many are looking towards property in order to get the highest return on investment possible from their money. In many people’s eyes, investing in property – whether that is on the Isle of Wight or elsewhere – could see them receive a greater reward than if they opted to leave their money in the hands of the government.

Regular income is still important

As part of the survey conducted by Barratt Homes, 70 per cent of those asked said that they would be looking for an investment that provided them with a regular return on their initial investment rather than one that would bring home just a lump sum after a given period.

isle of wight bay

Photo Credit: BlondieISFC via Flickr

This would go a long way to explaining why there has been an increase in interest in the property market, as investing in buy-to-let properties can offer the investor the best of both worlds – a regular return and an opportunity for capital growth once the property is eventually sold.
So, despite the fact that savings accounts are still top of the heap at the moment, many of the Isle of Wight’s inhabitants are looking to follow the mainland investors’ lead and get involved in the property market in the near future. This could prove to be an interesting development and it is certainly one that we will be carefully monitoring over the coming months and years.

Feature image credit: Garry Knight via Flickr.

If you enjoyed this blog post then perhaps you would like to read “A Guide to UK Property Investment for 2016“?

The 11 Best Places In Europe To Invest In Property

Posted on by Aspen Woolf

With more and more people scanning the UK property market for bargain basement prices, finding a great deal is becoming increasingly difficult. While there are still areas of Britain showing impressive growth and attractive yields, things are not what they used to be for investors.

With that in mind, many of those who wish to expand their property portfolios are now looking further afield for their next purchase. Naturally, for Brits, the first port of call is Europe. Here we take a look at the top 10 European cities for people who want to put their money into property. Let’s get started:

1) Brussels, Belgium

brussels belgium

Photo Credit: Nathan Guy via Flickr

As Belgium’s capital city and home to the headquarters of the European Union, Brussels is somewhere that deserves more than just a cursory glance. The city has high rental demand, but be aware of the high transaction prices and the taxes that you will have to pay here.

2) Riga, Latvia

Riga, and Latvia in general, has a great pro-landlord rental market and the red tape is not as overwhelming as it can be in other parts of Europe. Transaction costs are low and GDP growth is high. Yields may not be as great as elsewhere, however.

3) Berlin, Germany

Berlin Germany

Photo Credit: amira_a via Flickr

With the largest European economy behind it, Berlin is certainly a strong player in the European property market. The cost of transactions here are reasonable and the yields are very good. The rental market, however, is more tenant-friendly than pro-landlord.

4) Istanbul, Turkey

Istanbul is currently experiencing economic growth on scale that it hasn’t seen before. Despite the property market being decidedly pro-tenant here, the high yields and reasonable costs make Istanbul a place worthy of your attention.

5) Amsterdam, Netherlands

Amsterdam Netherlands

Photo Credit: faungg’s photos via Flickr

Amsterdam is another tenant-friendly city, but it certainly shouldn’t be dismissed because of it. Amsterdam has an extremely strong economy and the prices here are modest considering it is such a major city. Reasonable income tax levels are a plus here too.

6) Hungary, Budapest

Budapest has some minor ownership restrictions in place and the income taxes on rentals are a little on the high side but there are still areas worth taking a look at here. Yields are generally good and the law is more on the side of the landlord than the tenant. Transaction costs are sensible too.

7) Talinn, Estonia

Talinn Estonia

Photo Credit: Jiri Brozovsky via Flickr

Estonia is enjoying strong economic growth of late and the property market is beginning to reflect this. However, transaction costs remain remarkably low here while the yields are decent, although by no means high. Income Tax, however, is expensive here.

8) Bratislava, Slovakia

Rental income tax rates here are attractive to prospective investors as are the transaction costs. There are, however, some issues over property rights here and the rental yields are at the lower end of the scale.

9) Ljubljana, Slovenia

Ljubljana Slovenia

Photo Credit: jaime.silva via Flickr

The property market here is very landlord-friendly and the low transaction costs can prove enticing. The economy here is good, but buyers should be aware of the high taxation policies in place for rentals before committing to a purchase.

10) Vienna, Austria

As an extremely well established city, investing in Vienna comes with a certain degree of comfort. The stable political system here means that surprises are unlikely in the foreseeable future and the transaction costs are relatively cheap considering the city’s popularity. The rental market, however, is geared largely towards the tenant here.

11) Helsinki, Finland

Finland’s economic outlook is strong and the housing market here is buoyant. Yields are by no means high here, but the transaction costs are very reasonable indeed. The balance between landlord and tenant is fairly equal here too, however, the high income tax on rentals may put some investors off.

 

No matter where you choose to invest it is always important to do your own research and find out as much as you can about the property market in each city. We have taken the main points from our own research and experience and wrapped them up into a cosy little nutshell for you. If you have your personal experiences to add about any of these cities, let us know! We’re always happy to hear!

Feature image credit: Charles Clegg via Flickr.

If you enjoyed this blog post then perhaps you would like to read “What The Future Holds For the Property Market if a Brexit Comes To Pass“?

What Is A Buy To Let Mortgage and Is It Right for Me?

Posted on by Aspen Woolf

The property market is big news these days, and reports on second homes and the state of the rental market are go-to stories for many of the major networks and newspapers. However, if you are not in the know, some of the terms banded around can be a little confusing. One such term is ‘buy-to-let mortgage’.

So, what exactly is a buy-to-let mortgage?

Buy-to-let mortgages are specifically aimed at landlords who wish to invest in the property market and provide rental accommodation at the same time. While they are generally more expensive than a standard mortgage, they are often the only way for prospective investors to start their property portfolios.

Can anyone get a buy-to-let mortgage?

crowd of people

Photo Credit: Scott Cresswell via Flickr

In essence, yes, anyone can get a buy-to-let mortgage, but there are one or two things that may prove to be a stumbling block for some. The first factor is whether or not you already own your own home. This can mean owning the property outright or with an existing mortgage.

As you would expect, a good credit rating is another basic requirement when obtaining a buy-to-let mortgage. Not only that, your current spending habits must be in control too. If you are maxed out on every card you own and have lots of other outgoings each month then the chances are good that your application will not be approved.

The final factor is age. The vast majority of lenders will have an upper age limit on when your mortgage will end. Should that be 70, then a 45-year old would only be able to get a 25-year mortgage, not 30. There was, however, a recent case won by a couple challenging this ruling, so things could change in the future.

How do buy-to-let mortgages differ?

buy to let investments

Photo Credit: woodleywonderworks via Flickr

Whilst similar to standard mortgages, buy-to-lets do differ in some ways. Firstly, the deposit needed to take out a buy-to-let mortgage is generally higher than that of a regular mortgage. As a general rule, lenders will want to see at least a 25% deposit for buy-to-let properties. This can fluctuate from one lender to the next, but as a rule of thumb 25% should be your aim.

As with the deposit, the fees that you can expect to pay will be higher too and the trend continues with the rates of interest that you will need to pay each month. Therefore, doing your sums before taking on a buy-to-let mortgage is absolutely vital if you want to become a successful landlord.

Is there a limit on what you can borrow?

The amount that you can borrow from a lender is directly linked to the amount of rental income you predict that the property will generate. Most mortgage lenders will want to see around 25 – 30% more rent coming in from the property than is going out in payments.

investing in buy to let

Photo Credit: Dean Shareski via Flickr

When making your calculations it is important to factor in the cost of obtaining the mortgage too as failing to do so can skew your figures somewhat.

Who offers buy-to-let mortgages?

As buy-to-let has increased in popularity, so have the amount of lenders willing to offer mortgages to support the demand. The vast majority of high street banks now have specific buy-to-let mortgage offers available and there are quite a few companies that specialise solely in this type of lending.

Doing your homework is important at this stage, but a reputable and reliable mortgage broker can help if you prefer to have someone else do the legwork for you.

Other considerations

Reports in the media concentrate mainly on the people making vast sums of money through buy-to-let, but as with any investment there are risks associated with the property market.

think sign

Photo Credit: H. Michael Karshis via Flickr

Plan for the future as much as possible. Take into consideration times where the property may be without tenants. How will you meet the repayments and other costs associated with owning a property without the regular rental income?

Selling the property in times of financial distress is not always a solution either. If there has been a correction in the market when you need to draw your money out then you could be left with negative equity, a difference that you will be expected to make up.

Buy-to-let is an interesting proposition for many, and if you go into the property market with your eyes open it can be a fantastic vehicle for growth. Do your research, make the basic calculations, and follow your gut. If it feels right to you and the figures are in agreement, buy-to-let could be the ideal investment opportunity for you.

If you enjoyed this blog post then perhaps you’d like to read “Ways to Increase Buy-To-Let Profits“?

Feature image credit: Christian Schnettelker via Flickr.