Buy to let, Mortgage

The Buy to let hack

 July 8, 2021

By  sterlingcapitalgroup

Why buy to let?

People with a bit of money saved up are always looking to invest in a profitable venture that can help them grow their wealth, like buy to let. The UK property market has shown positive growth in recent years and offers a great way to boost your savings.

Property investment offers a significantly higher return than saving accounts. It is a great way to build passive income. If you buy a property with a mortgage, you can also get tax benefits that cover your cost of investment.

Let us look at why so many investors are switching to the property market, the different types of properties available for them and what investment options you have for generating a healthy return.

What makes a buy to let a good choice

Investing in property offers several benefits for people compared to other types of investment. For a start, a home investment gives a higher rate of return than ISA saving accounts. Even the best fixed saving accounts won’t give you a rate higher than 3% – 3.5%.

Compare that to buying your own home where you can easily get an average return of 5% – 8% each year. That is more than twice the return you get on a fixed savings account.

Cash ISAs are even worse and don’t give you more than 1.5% at best. Granted, you get more liquidity with them, so you may want to have some money in them. But they are not worth it for fixed investment.

Property investment is also better than investing in gold, silver or other commodities because you can improve your property to add value to it. It is not easy to do that with gold or silver.

Purchasing a rental property is even better

If you already have a home, you may want to look into buy to lets. Apart from value appreciation, you also get consistent cash flow from them every month.

Another good reason to invest in properties is that you can use the equity to get additional capital through remortgaging. Refinancing allows you to get more money that can be used to purchase additional properties. Many successful investors have built a profiting business on this very model.

The expenses incurred on generating rental income, including mortgage payments, are tax deductible with limited company mortgages. Any profit made on purchase and sale of property is taxed under the ‘Capital Gain’.

Last but not least, you can carry forward capital losses on property transactions and offset them against gains made in the future. This can be very useful for individuals who want to make a career out of buying, renovating and selling properties.

Commercial vs. Residential investment

Investment in commercial properties is quite different from investing in residential homes. Generally, commercial properties are leased out to businesses while residential homes are rented out to individuals.

Benefits of commercial property investment

  • Commercial properties are usually leased by business organisations to  conduct operations and generate revenue. This is why businesses are happy to pay more, and your return on a commercial property will be higher than a home rental.
  • Businesses are long term tenants. A business that moves into a high street store, office or production facility will remain there for 5 to 10 years on average. This gives you more income stability.
  • Business organisations are easier to screen and check for payment history. They are also more likely to obey any policies you set for occupation.
  • Property values appreciate faster for commercial buildings compared to homes. You can get a higher gain on selling an office building compared to a residential home in ten years’ time.

Residential investment (buy to let)

  • Purchasing residential homes is generally cheaper than buying a commercial property. This is why most new property investors start with residential units.
  • The demand for residential properties stays consistent even during a recession while it can be difficult to find commercial renters in a recession as businesses cut down operations.
  • It is much easier to get a residential property refinanced through a mortgage lender than getting a commercial property mortgaged.

Buying properties on your own

Investing on your own can be profitable if you are good at scouting, finding and managing properties. Do keep in mind that you will need to dedicate a lot of time and effort toThe Buy to let hack Sterling Capital Group managing a property when you are working on your own. If you purchase multiple properties, you will have to dedicate your attention to it full time.

You are also completely responsible for the gains and losses on the deals you make. Investing on your own can lead to great profits but if mismanaged it can also lead to great losses.

Property investment through mortgage

Most people looking to invest in properties work through a lender. This helps save time and reduces business risk. Financial advisory firms offer three main benefits.

  • They can help you raise more finance. Higher capital means you can purchase better rental properties in the market.
  • Lenders work through experienced brokers with decades of experience. Brokers understand properties very well and they can help you raise finance for profitable ventures with ease.
  • Mortgage brokerage firms offer a great way to learn about the market. Most new investors use this strategy, in the beginning, to get an idea about the UK property market before venturing out on their own.

Sterling Capital Group offers top market experts for buyers looking to invest in properties. If you have a good credit score, you should have no trouble finding a lender through our firm.


If you are looking to grow your wealth and build a passive income stream, property investment is a very profitable option. It is one of the least risky ways to build wealth over a period of time.

The main hurdle for people is to get the finances for purchasing their first property. Sterling Capital Group offers experienced mortgage brokers who can find you the best lenders with the right program for you. To find out more, please get in touch at 0207 822 2390.

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