Should I really invest?

Q.  I would really love to get involved in the Buy to Let market especially given the impact Brexit has had on the sales market. There seems to be so many bargains around right now with prices lower than I have seen in a few years. Now I’m mortgage free I’m wondering if I should bite the bullet and use some of my equity in my home to invest in something to make my money work for me? I do feel a tad nervous though as I have always played it ‘safe’, what other things would I need to consider as a first-time landlord, I don’t want to get involved unless I am one hundred percent sure it is worth the risk?

A.  First of all congratulations on seeing the opportunity. You are right, there are some real bargains around right now and exploring the idea of becoming a landlord for the first time is defiantly a really good idea to benefit from all that capital investment you will receive in the long term. It makes absolute sense to make that equity you have in your home work for you as long as you surround yourself with good advice, so you can make smart decisions. The first thing I would do is identify a property that you think would work as a long-term rental. To do this I would either enlist the help of a friend or colleague who is familiar with investing or find an Estate Agent that you can trust to help you source this. Next you will need an excellent independent mortgage advisor. They will be your link to securing the re-mortgage to release some equity for your deposit as well as some of the other expenses funding a buy to let will require. They will also in tandem find you the perfect buy to let mortgage with the most competitive rates. Any good independent advisor will source at least three different lender illustrations for you, so you can chose which one is a good fit for you. Given you are new to this whole world you may decide to fix yourself into a five-year fixed rate at the beginning just so you know exactly what your payments will be. Next you need to ensure the property that you intend to buy will cover its own expenses from the rent received, so in short the rent should cover the following, re-mortgage payments, mortgage payments as well as any service charges plus a small allowance for any future maintenance issues and ideally have enough left over to set aside for any void periods too and any tax payable. If it can cover all these expenses, then you are in a win win situation as it will be having no impact on your current financial status. Do remember to factor in stamp duty land tax as well as legal fees for your solicitor too when considering your deposit required from your re-mortgage.

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