When moving up the property ladder, one thing many people consider is the option to rent out their old home when moving to a newer one. Over the last few years, some have even bought property with the express intention of letting to others.

There is no doubt that in many cases this can be a great way to generate income. But whether you are renting out a building as a means to provide for your future, or plan to use the extra cash to help you get to your next property milestone, you are likely to need a buy to let mortgage. If you don't own the home in question already, it's this type of financial package you'll need in place when you become a landlord. But as with all mortgages, there's a certain amount of preparation you will need to do in advance. Some of this will involve getting a product that works best for you. For example, choosing between a fixed rate and a tracker is just one decision you'll have to make. But aside from these, you will also find there are other considerations before letting out the property.

Initially, you need to think about whether the move will work for you financially, as it will have to make sense not for short-term gain, but for a long-term plan - perhaps even one that helps provide for you when you retire. Look at the current state of the rental market and see if yours is a property that is in demand. This will help you gain a realistic idea of what you can expect to make back and how it will impact your own cost of living. Other things that might change how much you can ask from a tenant will include local transport links, as well as how attractive the surrounding area is. If there are modern fixtures and fittings or security features available, don’t be afraid to take these into account. But remember these may be just one of the many things that will need maintenance over time.

A lettings agent will be able to find you a tenant, as well as take care of the paperwork and manage the collection of the rent. But by having one in place you may be asked to hand over around 15 per cent of the money each month, so doing it yourself could be the better option. Private letting also means you'll avoid the fees some agencies charge - but you'll also be more directly responsible for the property.

You may want to do some research on tenants' rights. The Tenancy Deposit Protection scheme is just one thing you'll need to have some understanding of, plus an Energy Performance Certificate may also need to be in place. Having suitable buildings and contents insurance is another thing that's important, so you check that your policy is correct before moving anyone in.

Author's Bio: 

Leon Mellor is a writer, editor and podcaster from Manchester, England. Having produced and revised copy for a number of major financial institutions, he is highly experienced across a range of economic matters. Noel's money saving tips are especially focused around fixed rate ISAs and to find the best savings accounts.