Understanding the Rental Yield
Simply put, rental yield is the term used to refer to the income you receive from renting your property once you deduct the costs involved.
Understanding how a rental yield is calculated can help you to create an idea of the ongoing return you are likely to receive from your property investment.
Capital growth is the value by which property increases over time. This value can, however, also decrease.
To work out capital growth you must be able to compare the price you paid for your property with the current market valuation. Our team can help you with this. From here, this sum can be added to the return on your rental income referred to as a ‘total return’.
Usually, properties tend to increase in price in the long-term but can reduce in the short-term. This means that whilst it can be useful to calculate capital growth, it is only an estimate.
If you want to sell your rental property, you may be liable to pay capital gains tax on the profit made. For assistance in calculating rental yield and capital growth, call our team today.
Property calculations help investors to compare properties and investments such as bonds, ISAs and stocks and shares. For the money invested into a property to be fully liquidated, the property must be sold. This process can take a lot longer than it would do to withdraw money from other investments.
Sometimes investors can influence capital growth causing the overall property value to increase. Understanding the differences between investment in property for rental income and capital growth or both can help investors decide where they want to put their money.
At Chesworths, we don’t charge a solid fee for advice. Instead, we charge a mortgage arrangement fee of around 1.5% of the mortgage amount. An example of a typical fee charged is around £399. We also do not charge existing customers a fee to arrange a residential re-mortgage.
If you do not keep up your mortgage repayments, your property may be repossessed.