The Governments cuts to stamp duty did not provide assistance for higher-rate taxpayers since the majority of property investors now own BTL property through a limited company. because of this and the rise in interest rates, we have already seen some landlords change their minds and opt out of investing in higher-value properties because the rental margins are getting slimmer.
But there are still some key strategies you can employ to grow your portfolio against the grain of legislation. Here are our top tips for doing just that:
Work Closely with Your Broker
Securing funding for every investment is a crucial component of developing your property portfolio. And a dependable, knowledgeable broker is your most important asset in this. Your broker will assist you in comprehending the required finances and get you the best possible rates and terms. Getting the best possible deal on your property finance will aid your efforts when beginning to build a portfolio.
According to the Prudential Regulation Authority (PRA), lenders must determine whether a potential landlord can afford a buy-to-let mortgage. How do they do this? They operate on a scheme where you are supposed to be paying 2% more in interest than you actually are. Therefore, if your interest rate is 4.5%, your affordability will be evaluated at 6.5%. 5.5% is the required assessment percentage.
You must also demonstrate that your rental revenue covers the mortgage by a minimum of 125%, many lenders use a benchmark of 140% for this.
A larger down payment can reduce the amount of mortgage interest you must pay in rent; a deposit increase of £30,000 might make all the difference.
Not everyone should choose fixed-rate mortgages since they frequently have higher product costs and increased early-redemption penalties. The price comes for the comfort of knowing your monthly budget.
However, having the stability of a five-year fixed rate loan could definitely be advantageous in a time of uncertainty.
Always Buy Below Market Value
“Buy low, sell high” is one of the keys to quickly growing a property portfolio.
Every month, residential homes are sold for less than their market value for a variety of reasons, most notably when the seller need urgent cash due to a change in personal circumstances.
The key to finding these investment possibilities is to look in the correct locations first, and then to be brave with your offers; make many low offers on homes you’re interested in and see which one receives a reaction.
Buying below market value increases your chances of a significant ROI.
For expert investment advice, get in touch with the team:
☎️ 0113 222 4537
Alternatively, read one of our most recent property investing guides: Property Investing For Beginners. Our comprehensive guide will help you create your very own property investment strategy, and hopefully equip you with most of the knowledge that you’ll need to grow your property portfolio.