Buy to let Mortgage

If you are buying a property to let, you need a specific buy to let mortgage.

Buy to Let Mortgage Basics:

Generally, you can borrow a maximum of 75% of the purchase price.
Rates for buy to let mortgages tend to be higher than owner occupier mortgages
Interest only mortgages have proved popular with lots of buy to let investors over recent years. However, these are more difficult to secure than in the past.
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.