The arrival of March signals spring clean fever for many households. Likewise, you may want to spruce up your own UK buy-to-let properties, so they look their best for current and prospective tenants. Yet beyond this, it’s wise to review your financial model too – the mortgage deals, costs and decisions that are limiting your earnings.
Overseas investors risk paying over the odds due to unfamiliarity with UK lending practices. But we are changing that, by suggesting how to spring clean your UK finances.
Review the strength of current mortgage agreements
Things can change very rapidly in the property market. A deal you struck one, two or half a dozen years ago might be less enticing in today’s climate. Interest rate increases from the Bank of England can affect what you’re paying. They may drop, for instance, making a fixed-rate mortgage seem more expensive by comparison. Or they can rise, forcing up the price of tracker and variable rate mortgage schemes.
In fact, rates are already climbing due to the end of the Term Funding Scheme. This could be the time to remortgage; releasing some equity for further investment can help you continue to build your portfolio. A team of specialist mortgage brokers like us can show you what’s available, how lenders compare, and whether you may face charges for leaving a mortgage early.
Consider all the angles of a healthy ROI
Typically, lenders want returns from a BTL investment to cover 125% of the mortgage payments. Your rental income has to cover the cost of the property, and land cash in your own pocket too. Without knowing it, you could be spending a lot each month on a building that isn’t delivering a good yield.
If you’re hunting for new properties, we suggest examining the average yields of other homes nearby – what they charge for rent, how much they cost to buy, and which lenders are offering the most competitive rate. The Properties section of our website is worth perusing for the latest UK investment offerings that take these factors into account.
Amenities (such as a garden, terrace, patio or en suite bedroom) will help you boost the rent value, but that has to be measured against the amount of money you spend to secure a property with these features or modify a property that doesn’t. Plus, tenancy demand shifts from place to place; there isn’t a catch-all recipe for producing a high yield.
This is another reason why a specialist broker like Liquid Expat Mortgages is key to your success. We can help you navigate the UK property market and ensure you get the best from your portfolio, and even provide options for pre-tenanted properties.
Reassess your mortgage life insurance
Typically, people buy mortgage life insurance for one reason – to ensure their remaining property obligations are covered if they die before paying everything back. There aren’t many insurance companies in the UK who will give overseas investors such protection, but it is important to make sure you secure cover. If your loved ones rely on you financially to be able to afford your home, a life insurance policy can give you some much-needed peace of mind.
If you already have cover, it’s vital to remember that rates can vary from one insurer to the next. You can easily pay too much for mortgage life insurance as an expat, especially if you’re tied into annual renewals. Reviewing the agreement you have in place, with a service like Expat Life Quotes, will ensure you have the appropriate, affordable cover.
Contact Liquid Expat Mortgages to help you with all of the above. Our specialist team will learn about the shape of your finances, before sourcing opportunities that make sense within your earning and portfolio aims. Get a free quote on +44 (0)161 871 1216 or head to our mortgage page for an overview of BTL strategies.