Buy to let mortgage rates: a solution
It’s no secret – even the best buy to let mortgage rates these days can make you wince. In fact, this goes for mortgage rates in general, which are now hovering between 4-5% on average. But now isn’t the time for investors to get upset by the rising rates. It’s time to get planning.
Because there is a way to mitigate those rising mortgage costs. How? By spreading them amongst fellow investors.
When you invest in buy to let property together – whether that’s with friends, family, or business partners – you can split the mortgage repayments between you, and slash your own outgoings down to size. Here are five tips on how to invest well as a group, and tackle those tricky mortgage costs.
1. Know your fellow investors
Good friends don’t always make good business partners. Before you invest, ask yourself honestly: do they have a reliable income? Are they financially stable (and responsible)?
Remember – you’re planning to take out a buy to let mortgage with this person. So it’s important to answer these awkward questions at the very beginning. If you don’t, you’re not just risking your initial investment, but possibly the entire relationship (which could be more valuable to you). Better to be safe than sorry.
2. Align your goals
This might sound obvious – but make sure you and your fellow investors share the same goals. If one of you is looking for long-term capital appreciation, for example, but another prioritises short-term rental income, you may already be pulling in different directions. Aligning on your objectives from the start is a good way to guarantee an investment that suits everyone.
3. Consider a limited company
In our experience, the best investments often start with a limited company. These can be more tax-efficient than investing in your own name – especially for higher earners – while also securing your investment and limiting personal liability if things go wrong.
Often, a limited company would take a while to set up, and is a hassle to manage. But GetGround simplifies the whole process, from company design to your annual tax returns. You can learn a bit more about that here. And, to check out how a limited company might be more tax-efficient for your investment, use our buy to let earnings calculator.
4. Pool your money in a shared account
Getting a buy to let mortgage can take a bit longer when investing together. So it pays to group your cash together, ready for when it's time to complete your investment. This way, you can easily see your cash flow in one place, rather than having outgoings from multiple accounts.
Bear in mind that, if you invest with a company, you'll need to open a business account. Again, we can help with that.
5. Get your legal documents right
A good Owner or Shareholder Agreement can be your ticket to stress-free investment. This binding contract sets out how you’ll resolve any disputes between investors, while clarifying roles and protecting your rights as an investor.
Investing with a poorly-drafted agreement, a generic document found on the internet, or (worse) no agreement at all, could leave you vulnerable in the event of any disputes. This could end up costing you more than a few months’ mortgage payments – so it’s really not worth the risk. The good news is that, with a limited company from GetGround, all your legal documents will be written specifically for buy to let investment. For total protection.
Stick together to beat the rates
If you’re worried about those rising buy to let mortgage rates, investing together could cut the costs. And, what’s more, we can help you find, finance, structure, and protect your investment – every step of the way.
To learn how GetGround simplifies the whole process of investing with your peers, book a free consultation today. If you have any more buy to let mortgage questions, you can find the answers this buy to let mortgage FAQ article or you can use a buy to let mortgage calculator to see what options you may have access to.
