Buy to Let
This sector of the market has grown in poularity over the past few years and has allowed private individuals (including via limited companies) to directly own residential property as an investment.
Generally speaking the lender will allow you to borrow between 85% and 90% of the purchase price even if you have a mortgage or loan on your main residence. The loan needs to be self financing in that the rent needs to cover the mortgage payment on an interst only basis (even if you opt for a capital & interest repayment loan). What this means in practice is that if the mortgage payment is £1,000 per month the rent would need to be between £1,000 and £1,250 per calendar month (that is between 100% and 125% of the interest only payment, depending on the lender's criteria).
Although Buy to Let is considered semi commercial lending and IS NOT regulated by the Financial Conduct Authority, buying a property to rent should not be taken lightly from an investment perspective but also has income and capital gains tax issues that should be considered. So advice and guidance may be essential.
Your property may be repossessed if you do not keep up repayments on a mortgage or loan secured on it.
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The Financial Conduct Authority does not regulate taxation advice and some types of Buy to Let arrangements.
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