Property can be like a game of snakes and ladders. When you’re new to the lettings business hopefully you will climb a few ladders, but you can be particularly vulnerable to slithering down the occasional snake. Here are some of our top tips for avoiding the pitfalls.
Getting finance continues to be quite complex. You may assume your credit file will not present you with problems, but there are a number of risks.
- Firstly you will need to have no adverse credit such as default accounts or County Court Judgments.
- Having more than 3 applications for credit on your file in a six month period can impair your credit file so only make an application for credit if you’re sure you want to proceed and prioritise mortgages because they require the highest possible credit score.
- High balances on credit cards can also affect your credit score, so if you can, pay off your cards before applying for a mortgage and end any that are no longer used rather than just waiting for them to expire.
- If you don’t already own a property and are purchasing a buy-to-let as your first property you could be restricted to a small number of lenders and may need to consult a broker.
- Many lenders require a minimum income (from acceptable sources such as employment and generally not rental income) of around £25,000 per annum to secure a loan.
- Generally first time landlords can choose from a wide range of lenders but beware that once you have a few properties many lenders impose caps on the number of properties you can own, either mortgaged with the lender you are applying to or a simple cap on all properties owned.
- Always check the lenders terms and conditions for any other expenses or hidden costs in the small print so you can factor these in.