Some buy to let mortgages are not regulated by the Financial Conduct Authority.

Becoming a private landlord should not be seen as an easy way of making money. It can be riskier and more complicated. It can also be very time consuming and there is no guarantee that house prices will rise. Having said that, buying a second property to let to tenants could reap considerable financial rewards over time.

The Different Types Of Mortgage

There are 3 main differences in buy to let mortgages:

• Rent Potential – most lenders will look at whether or not to offer you the mortgage based upon the monthly rent expected against the property value. In some cases your income is not ever considered.

• Interest Rate – buy to let mortgages typically have slightly higher interest rates.

• Larger Deposit – typically a minimum 25% of the property’s value is required as a deposit. Some lenders will allow a 20% deposit but these usually come with a higher interest rate.

If you are looking to make a profit from a buy to let property over a long period of time then look towards the property as being an investment and not somewhere for you and your family to live. Do some research of the rental market in that area and speak to letting agents to see how desirable the type of property is to tenants.

When you manage a property there are many costs involved in addition to the monthly mortgage repayments. These additional costs include:

Property upkeep – maintenance costs for the property.

Letting agent’s fees – letting agents charges can vary substantially from agent to agent so it is worth shopping around to get the best deal. This will also depend on whether you want to manage the property yourselves or have the agent do it for you.

Ground rent/service charges – can be applicable on some properties so it’s important to ask the question before confirming your intention to purchase.

Legal insurance – to cover costs from evicting tenants in the event of non-payment.

Insurance – building insurance and contents insurance for the items provided as part of the rental agreement. Buildings insurance will be a condition of any mortgage offer from the lender.

Furnishings – the purchase of any furniture. If the property is to be let furnished, make sure you are covered for this by your home insurance.

Gas / electrical appliances – cost of maintaining appliances and ensuring they comply with any regulations such as safety tests.

Decorating costs – get estimates and quotes for any work the property may require , from a lick of paint to freshen the place up or bathrooms and kitchen should they need replacing.