Buy to let Mortgage

• Generally, you can borrow a maximum of 75% to 85% of the purchase price.
• Borrow up to 100% of the cost by using your existing home as security
• Traditionally rates for buy to let mortgages tended to be a little higher than owner occupier mortgages (and they still are with some lenders) but there are some really good rates available if you use a good broker.
• Interest only mortgages are proving popular with a lot of buy to let investors.
• Mortgage Self Certification products are available with some lenders, to those who have problems proving their income.  A premium is usually charged for this.
• When you sell the property, you will be liable for Capital Gains Tax (CGT) on the increase in the property value, which is currently charged at 20%.

Buy to Let Mortgage Criteria:

• Most lenders calculate what you can borrow based on rental income vs. your mortgage payment (this is stressed to allow for rate changes, periods when the property is vacant etc) and they will also take your own personal income into account too.
• People with a portfolio of properties (whose rent more than covers the mortgages) tend to be in the best position and will usually find it very easy to arrange finance.

Fees:

• Keep an eye out for indemnity bond fees.  Most lenders have removed indemnity bond fees for owner occupiers, but some do charge them on investment properties.
• Don’t forget to budget for stamp duty costs, legal fees & outlays.
• A valuation will be required which usually costs €130 - €150.  If you plan to borrow 100%, by using your existing home as security, you’ll have to get a valuation on your home too. 

A couple of tips:

• Speak to a local estate agent or letting agent about the type of properties that are most likely to let in the area and the levels of rent you could hope to achieve.  You’ll also get a good indication by searching for properties for let on Daft.ie
• You should make sure you have funds to cover the mortgage when the property is empty.
• Keep accounts from the very start and record all expenses you incur in relation to the property.  This will help reduce your tax liability.
• Owning properties to let is like owning a business and it should be treated as such.  Like all businesses, it’s important to look at your costs regularly.  If you have an existing portfolio of properties, there’s a good chance that you are paying over the odds, so find out how much you could save by refinancing.  People with bigger portfolios could save tens of thousands of euros per year by choosing the right portfolio mortgage.

Other Popular Articles:

• Buying a Home - Step by Step
• Mortgage Application Process
  
• Rates & Costs
• Do I Need a deposit?
  
• Which type of mortgage is best for me?
• How Much Can I Borrow?
• Would I Be Approved?
• Approval in Principle - Why it's so Important
• Online Mortgage Application

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