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Where should you start when investing in real estate?


Buying real estate can be an extremely tricky topic to navigate. Especially when you’re buying to invest rather than buying to find a home to live in.

It is without surprise that as little as 10% of people in the Uk ever end up buying a second home as an investment so it only makes sense that if you are starting off the process you need to find information online.

Investment properties are not a topic that is widely talked about nor understood which is why in this article we aim to clear up any doubts you may have.

What mortgage do you need to invest in real estate in the UK?

To invest in real estate in the United Kingdom, you will typically need to obtain a buy to let mortgage. This is a loan designed specifically for investors, as the mortgage is approved based on rental income rather than personal income.

The mortgage requirements vary depending on the lender, the property being purchased, and the borrower’s financial situation. When applying for a buy to let mortgage, it is also necessary to have a good credit history- though so you cannot just meet deposit and rental income requirements and still be approved.

In general, most lenders will require a deposit of at least 5-20% of the purchase price of the property, though a larger deposit can help secure a better interest rate, especially when interest rates are low.

It’s vital to understand that obtaining a mortgage for investment purposes can be more challenging than getting a mortgage for a primary residence so it is often not until a buyer is able to afford a second home that they go ahead with an investment property.

This is because lenders may view investment properties as higher risk, and therefore may require higher deposits, higher interest rates, and more of a stringent stress test for the mortgage’s approval. 

If you are unsure about how to get started with a buy to let mortgage, it’s recommended to consult with a mortgage broker or financial advisor to help navigate the process and find the best options for your individual circumstance as things can vary greatly from one investor to another.

What do you need to prepare to invest in real estate?

When buying a house, not only will you need to provide several important documents but you’ll also need to have some finances in place and the organisational skills to have hired the right professionals.

Most of the time, you will need:

Proof of identity

You may need to submit an ID in the form of a driving licence but more than likely a passport in order to show that you are legitimate to the bank and perhaps some estate agents. 

Having said this, if you’re able to get a mortgage in principle from the bank this is usually enough proof to show that the offers you place on houses are serious and most estate agents will not work with you without it.

Proof of income

Like proof of identity, this is something that is submitted to the bank in order to obtain a mortgage in principle. A document that shows you have the right credit score and income to show you can qualify for a certain amount of mortgage equity.

Credit report

A credit report is vital for the approval of a mortgage because it shows that you’re financially responsible and in a good position to pay back the mortgage you are seeking to pay off.

To have hired a solicitor

Solicitors are important in the completion of a property so it is a good idea to hire a solicitor beforehand to go over the conveyancing and exchange contracts with a buyer.

It could be the case that there are legal issues in the property and you need to move quickly and with the right knowledge. This is why it’s recommended to hire a solicitor beforehand.

To have hired a surveyor 

Surveyors are able to find the true value of a house during a property visit. This is an optional step you can take to ensure the property you are buying doesn’t have any faults or problems that could result in it losing its value.

For the most qualified professionals, hire a chartered survey from the Royal Institute of British Surveyors who have to undertake specific testing to show that their knowledge is the best in the industry.

How does real estate compare to other property investments

When you try to compare property to other assets, you may find that there are simpler assets out there but they may not have the same return on investment as what you seek. The risk associated may differ too.

In general, some alternatives you can have to real estate investing include:

  • Cryptocurrency
  • Art
  • Commodities
  • Stocks and shares

Pros of investing in real estate

Real estate is one of the few assets where you can benefit from the rental yield of a property as well as the capital appreciation. The only other comparable commodity are stocks that pay dividends which could be compared to rental income and stocks that go up in value at the same time which could be compared to the capital appreciation of a property.

Another great advantage is that you can see the direct impacts you have on a community. investing in property allows you to provide housing which is an important role in the working of a healthy economy.

In addition, and perhaps the most important benefit for investors is that you can purchase a house without the full amount of equity needed to purchase the house outright using a mortgage. You get to benefit from the income of a property by only putting 20% down in a deposit which is unique to any other asset type.


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