Jul 06 2018 03:22:00
Neil Conlon of NI Property Finance has put together a guest post this month for Investment Focus.
He tackles the top three burning questions he hears regularly from investors and landlords like you, and gives a quick run-down of his top tips.
1. How much can I borrow?
A rough estimate is 4 gross income, however, credit commitments such as loans, car finance and credit cards will reduce this multiplier. Each lender has its own specifics on disposable income, the multiple of times 4 is used for an overall maximum lend figure before assessment of income and expenditure.
Expenditure taken into consideration includes but is not restricted to;
The best advice would be to get an agreement in principle which will give peace of mind on the maximum you could borrow.
2. 2 or 5 year fixed?
The most risk-averse option would be to fix for longer, however, if you decide to sell your property within the fixed period you may have early repayment charges, as much as 5% of the mortgage amount.
Therefore it's down to a decision on the length of time you see yourself in the property, if it’s a starter home fix for shorter, if this is a medium-term home which fits your needs should circumstance change such as additions to the family, then fix for longer.
The cost difference between the best 2 year fixed and 5 year fixed is 1.84 v 2.44. A £35 difference on a repayment mortgage of £130,000 with 10% deposit over 25 years.
Peace of mind for £35.00? In my opinion, it's worth it, as long as the property fits your long-term needs, but do always seek professional financial advice tailored to your own circumstances before making investment decisions.
3. What costs are involved in buying a property and what are the running costs?
In short, there are:
Direct Property Costs include:
Thanks very much to Neil for a helpful and succinct Q&A!