Compound interest is the eighth wonder of the world – Albert Einstein
The greatest thing about property is the ability to “leverage” your money by only putting a deposit in.
If you buy a house for £100,000 with a 25% deposit you’re effectively taking ownership of that property for £25,000. That means if house prices go up by 25% then the equity in the house has gone from £25,000 to £50,000, doubling your money.
That’s the great thing about property, by accessing cheap debt you can double, triple your money very quickly.
Then if you throw in compound inflation, i.e. if houses go up by 5% a year for 10 years – you might think your house has gone up by 50% but because you’re increasing by 5% on 5% each year you’ve actually made 62%!
Gearing and compound inflation are landlords best friends.
You’ll generally raise debt through a buy to let mortgage so I thought I’d chat to Gary, our mortgage broker to cover off the basics:
- The difference between buy to let and residential mortgages
- Affordability, how it’s calculated – rental cover, minimum income etc.
- Deposits – typical amounts, gifted?
- Restrictions – property values, new builds, flats etc.
See video below 👇
One of your biggest costs will be your mortgage and due to interest rates being so low it might be worthwhile re-mortgaging. That’s why we’ve teamed up with Gary to provide free advice and help, if required.
It’s our aim to help you make you as much money as possible by maximising your income or minimising your costs.
For any sales, lettings, refurb or buy to let mortgage help contact us today by phone or email.