Your home may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
We get a lot of First Time Buyers asking for our opinions on where to buy and what to look out for. We get this a lot from First Time Landlords too actually but for different reasons!
It’s difficult for us to say for certain whether a property is perfect for someone, only you’ll know that, but we thought it could be helpful to list a few considerations to bare in mind to help make that decision.
Do send us the Rightmove link though as we are a bit nosey and love to see what you want to buy!
This is a very personal thing of course but it is wise to not only consider whether it’s a good investment for now but whether your future plans (I.e. family, job) would suit the location. You also need to think about how long you will be there and how easy it will be to sell when you do want to move. For this we’d recommend looking at:
- Catchment area for schools – It may seem a way off but if you are buying and thinking of starting a family it is definitely important from a personal point to look into this. Even if you aren’t looking to start a family, the people buying from you in the future might be so it could still be a good thing to think about.
- Public transport links – Again, whether this could be for you or for the people buying from you in the future, it’s important to consider. You never know where your job might take you so it could be good to be near a good Bus route or train station. On the other side of things, you wouldn’t want to move in and then find out there is a train line being built nearby that you could hear and so close it could reduce the value of your property. Or a bus route and bus stop due to being installed right outside your front window!
- Local Amenities – Of course, you would like a local shop to quickly pick up that pint of milk you’ve run out of but what about your big food shops, how far do you have to travel for that? On the other side of that coin, you wouldn’t want a 24hrs supermarket in your back garden! I wouldn’t anyway.
It’s impossible for us to list all of the considerations, especially as everyone wants something different from their property but those are the 3 main things we hear people saying they wished they considered. Catchment Area, Public Transport Links, and Amenities.
BEING NEAR COMMERCIAL PROPERTY
When it comes to getting a mortgage on a property there is one major factor that would restrict your options, its proximity to commercial property.
If you are buying a property above, next to, or near to any commercial property, you will have fewer mortgage options straight away but then it depends on the type of commercial as to how restrictive these options are. Essentially, Lenders consider how easy it would be to resell the property if they had to repossess and also how the value might be impacted by the commercial below. They mainly focus on what they call ‘Anti-Social sounds or smells’. This would include commercial property such as pubs, clubs, takeaways, industrial property, etc. These could be seen as Anti-social due to the hours they are open, the people they attract, and the smells they create.
Even if the nearby commercial doesn’t seem anti-social to you it would be worth running it by a mortgage broker first to make sure. There are some odd restrictions you may not think about. Hairdressers, for example, tend to have chemicals stored in them overnight, and therefore lenders worry about fire risk and may not lend. The commercial may not even be anti-social at the moment but the unit could have the right license to become something restricted.
Our advice, find out as much as you can about the commercial property and its licenses from the Estate Agent and they give us a call. We’ll be able to let you know whether it’s anything to worry about, whether it’ll cause restrictions, and what interest rate you may be looking at when securing a mortgage.
For queries related to debt consolidation and remortgage, click here!
BUYING A PROPERTY TO RENT OUT
When it comes to buying an investment property that is a completely different set of considerations really. You don’t necessarily need it to be near your family or friends so the location can be a bit more open. You also probably want it to be a solid rental property and therefore be near a busy area that you may not want to live near yourself. We find people look at this a different way when picking a property:
- What type of tenant do I want? –
The easiest type of tenant would be a family or professional that sees it as their long-term home. In which case you’ll want to purchase somewhere in a good catchment area, Near good transport links, etc. Many of the same considerations you’d take into account when buying your own home. Although this is probably the easiest tenant, you may not get as much income from the property as other types of tenancy.
What if you want to rent to students? You’d then want a property where you can maybe rent by the room, near to a university or campus. Close to shops and public transport.
In Bristol we have a number of large hospitals and you find that landlords by houses and rent out the rooms to nurses or junior doctors. Much like the student lets you can get a fantastic yield by renting out each room but you would want it to be near to their work, etc.
It’s best to work out what type of tenant you want and then put yourself in their shoes for what they would want from a residence.
- Am I going to have a letting agent manage it for me?
If you are planning on managing the property yourself you can save on letting agents fees but this would also mean you’d probably want to buy a property near to where you live so you can vet the tenants, complete inspections, and repair anything needed quickly.
If you get a Letting Agent involved you may open up the areas you can look in as they could take care of all of the day to day management. We’re based in Bristol where the property is quite expensive but if we had a letting agent managing property for us, maybe we’d get more for our money if we were to buy up North in Liverpool or Manchester where the property is cheaper but the rent would still be high?
- Do I want the property to significantly increase in value?
If you are buying the property and hoping that it will increase in value in the short term, or long term, so that you can sell it and make a profit then it might be best to think about an area that is set for growth.
You hear the term ‘up and coming’ a lot when looking for a property. Meaning, it may not be really desirable at the moment but there is a lot of development and investment in the area so, in 5-10 years’ time, this will be an incredible area and the property will have gone up in value. Worth thinking about.
Being in Bristol, a few years ago we saw a huge amount of people investing in Newport, Wales. The property was still cheap and it is commutable to Bristol and Bath very easily. The reason for this increase in investment was because they announced that they were going to drop the Severn Bridge Toll and sure enough, as soon as they did you found the property prices jumped up in Newport. Bristol and Bath property and rental values are very high compared to Newport so as soon as that bridge toll was scrapped, people suddenly started looking to buy in Newport and commute to Bristol/Bath. The people that got in there early saw a jump in their property values and a jump in the amount they could charge in rent. If you’re looking for a Broker or Mortgage Advisors in Bristol, who can manage your mortgage application from start to finish click here.
Next Steps
We talk to people buying their own properties and Landlords up and down the country every day and are happy to talk to anyone looking for advice. Do give us a call on 0117 332 5197 if you think we could help. Our initial conversations usually last around 15 minutes.
Alternatively, you can email enquiry@lloydwellsmortgages.co.uk and let us know how we can help you.
We will discuss:
- How much you can borrow
- What that will cost
- What fees can you expect?
- How Lloyd Wells Mortgages work
- What insurances you will need
- What documentation you will need to provide
Your home may be repossessed if you do not keep up repayments on your mortgage.