As an investment, buy to let properties are one of the strongest. Not only can you pay off the mortgage with rent taken from your tenants, but in the long run you end up with a second home that you can choose to do what you want with. You could sell it once the mortgage is paid off to get a cash lump sum which could be used for further investment or just to keep you financially stable, or you can continue to rent out the property to make yourself some extra monthly income.
With this in mind, a good investment decision could be to buy a holiday home, either here or abroad to rent out to tenants and also keep for yourself for breaks away.
Make sure, firstly, that you can afford a second property by using a buy to let mortgage calculator to see exactly how much you can borrow and what your repayment term is likely to be. Most lenders will only advance a mortgage if you can afford it and it is always helpful to be a step ahead and know what your options are. A repayment mortgage calculator means you will know in advance what your monthly payments will be so you can decide how likely it is that you will be able to afford the property during quiet months or if you cannot find tenants right away. You can find a free mortgage calculator online and have the option of comparing against an offset mortgage calculator to make sure you are making the right choice for your personal situation and how much you have in savings.
If you are ready to go ahead and have the money to do so then your mortgage will be based on your estimated rental income and here is where your choice of property will pay off. If you choose to rent in the UK you should look for a good location in a town or city which has a large tourist culture. Holiday lets tend to be booked by families so you should look for a home with a number of bedrooms and in an ideal location close to transport links and places of interest. Take into consideration that you will probably need to use a holiday letting agent and that some of your rent will be taken up by their fees – and it is worthwhile putting this into your calculations.
If you are looking for a holiday home abroad choose a country or area you know well to help you to choose a property, and try to find a mortgage lender that has branches in both this country and the country you will be buying in. It would help to look at a lender who can guide you through the process as it is likely to be a little more complicated buying abroad than in this country.
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