- 1). Check that rental income from existing buy-to-let properties covers the monthly mortgage payment and all other outgoings, such as maintenance and management fees.
- 2). Review your overall financial position and be clear about the long-term responsibilities and financial commitment of extending your property portfolio. Consider taking impartial advice from an independent financial adviser.
- 3). Ask an estate agent to value your existing buy-to-let property. Work out how much equity you have in the property; this is the notional profit after the property has been sold and the mortgage paid off. Many lenders will allow you to use the equity in existing properties to part-fund the purchase of new properties. Be clear about the cost of this, including additional mortgage payments and maintenance, to ensure you do not overstretch yourself.
- 4). Look for an additional property or properties to buy to extend your portfolio. Identify flats and houses in popular areas that will provide a steady stream of rental income sufficient to cover the additional mortgage payments and costs. Consult local letting agents to get details of the local rental market.
- 5). Finance the purchase of the additional property. Banks and building societies provide buy-to-let mortgages for property investors. However, many people choose standard interest-only mortgages to finance the purchase of additional properties to reduce the overall cost of monthly mortgage repayments. Many lenders will allow you to use the increased value of your first investment property as the deposit for the next. The mortgage market is highly competitive, so shop around for the best rate.
previous post
next post