Tracker mortgages are back with a bang!

More than 30 lenders withdrew their various offers of tracker mortgages from the market citing reasons of re-pricing. However, the surprise cut of base rate by 1.5% has forced many lenders to increase their margins by two-fold on tracker mortgages and starting this week, many banks and mortgage giants have reintroduced tracker deals for existing home owners. For example, Halifax, UK’s largest lender has reintroduced its two-year tracker deals for individuals who have a deposit of 25% at a rate of 5.14%, or 2.14% above base. Homeowners who have a 25% deposit with Mortgage major Lloyds TSB can hope to pay 2.09% above base. Last week, Abbey’s two year tracker was 1.29% compared to the current 1.99% above the base rate.

A tracker mortgage is a very commonly used product in the UK and is nothing but a loan secured against a real estate property and the interest that is charged promises to have a definite relationship with the base rate of Bank of England. Tracker mortgage rates are usually cheaper than fixed or flexible rate mortgage. However, the unique part of tracker mortgage rate is that even though the cost of a tracker mortgage dips with falling interest rates, it does not guard the owner against rising interest rates.

When it comes to remortgaging, individuals get mostly attracted to cheap mortgage rates which in most of the times happens to be a discount or tracker mortgage. However, there is a subtle but important difference between tracker mortgage rate and discount mortgage. While discount rates are connected with the standard variable rate of the mortgage provider, a tracker mortgage is linked with the base rate of Bank of England. A tracker mortgage mirrors the current financial situation and its interest rates are cheaper than fixed mortgage rates.

If you are looking for small payments at the early stages and willing to take the risk of higher payments in the future, then tracker mortgage are best suited for a person like you. However, like all loans, you must read the fine print before opting for tracker mortgage. If the interest rate is set well below the base point for 2 years, you can have some lenders stating that they will assess the situation once the base rate falls too low or some even mentions that you have to a pay a minimum rate if the interest falls much below expectation. Such conditions defeat the entire purpose of opting for a tracker mortgage.

You have to be intelligent to know when to go in for a tracker, fixed or capped rate option. At a time when chances of base rate falling are very high in 2009, it would be only but foolish not to opt for a tracker rate mortgage. As a borrower, you can also look for trackers that provide a drop lock choice which enables you to move to a fixed rate any time you wish. So now is the right time to opt for tracker mortgage rate with interest rates falling sharply.

By Nancy Dodds of Financemate.co.uk

Property Refurbishment Buy to Let

Over the course of the next two years or so, there are going to be some losers in the property market; those who have to sell up fast, particularly Buy to Let investors who have over “geared” their portfolios, cannot re-mortgage away from a high charging standard variable rate and are forced to sell of part portfolio’s to reduce monthly outlay. However, business is business, and wherever there are losers, there will also be winners!

We have recently be seeing a huge number of these properties coming onto the market, under value, distressed and in need of some tender loving care.

A chance to steal!

We have managed to find a number of mortgage products that will allow a purchase of a structurally sound property, which needs, say a new bathroom, kitchen and decorating “make over”. Providing that the property has an existing usable bathroom and kitchen, however poor the condition, this product seems to fit.

Most ordinary Buy to let products would fail this type of purchase in a key area; rent. Buy to let lending criteria, states that the mortgage loan must be supported by rental coverage, say 125% of the interest only monthly cost.

The lenders surveyor, will state that due to condition, the property will not attract a tenant, therefore no rent, and the application will fail.

These special products are “one off” Buy to Let products, that do not use rental to support the loan, they use self certified personal income from all sources.

Perfect!

What more, whatever your exit strategy they work. If you want to take your profit and run, you can.
If you want to do the property up, and retain as a rental you can. The products are “portable”, which means that you can take them with you to your next project, simultaneously replacing them with a now rental based buy to let product on the re-furbed property.

Let Property Strategies are buy to let mortgage brokers - http://www.letpropertystrategies.co.uk/

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Buy to let Mortgages - How To Choose The Right One

Buy to let mortgages come in all shapes and sizes.  Which type you should go for depends on all sorts of factors: your attitude to risk, your long-term investment goals (e.g.immediate income, future profit, etc.), how large a portfolio you have or aim to have, what type of properties you are interested in, etc.

• To start with, your level of risk tolerance will affect your choice of interest type – fixed or variable.   A variable interest rate can be more risky as it is out of your control, and once your interest payments start to spiral it can wipe out your profits, or even threaten your ability to pay the mortgage.  If you are a beginner, it’s a good idea to start off with a fixed rate, though even this is not completely risk free.  If the mortgage rate drops below your fixed rate you are paying more than you need, while if it goes higher you may find it hard to budget for your payments when the deal ends.

• The two main types, fixed and variable rate, include other types such as capped rate, tracker mortgages, discount mortgages, stepped mortgages etc.  Your broker will discuss with you whether any of these might be suitable for you.  Discount rate mortgages can often seem tempting, but once the discount period is over you can actually find yourself paying a higher rate.

• If you are looking for an immediate cash flow from your buy to let mortgage, you will probably be attracted to an interest-only mortgage.  This increases the chances of your rental income exceeding your outgoings.  Of course, when the mortgage term ends you will have to repay the capital.  You may be hoping to do this by selling the property at a profit, but in current market conditions this is far from being a certainty.  If you have no clear idea as to how you are going to repay the capital, you might be better off with a long-term repayment mortgage – the longer the term, the lower the rates. 

• Some lenders actually offer buy to let mortgages with a flexible rate.  These can be hard to get hold of, but it’s worth shopping around and asking your broker.  This way you could have the opportunity to take payment holidays when the property is empty.  Of course the downside is that the overall rate is higher.

As well as there being different types of mortgage, different lenders impose different conditions for buy to let mortgages.  In particular you need to check for the tie-in or lock-in period for each product – that is, how long they insist you remain with them before you can move without incurring a redemption penalty.  You also need to check arrangement fees, which in some cases can cancel out the advantages of a low interest rate.

With all these variations in buy to let mortgages, you would be well advised to use a specialist broker when you are going for your mortgage.  The broker can help you decide which type of mortgage to look for, based on your particular requirements, and will know which are the best lenders to approach for that particular type of mortgage.  In fact some of the best buy to let mortgage deals are not generally advertised and the broker will be able to locate them for you.  If you are just starting out as a buy to let investor, the last thing you want is to end up with the wrong type of mortgage – so make sure you have the best advice to make the right choice.�

Why Do You Need Buy To Let Mortgage Advice?

The way the property market is at the moment, ordinary residential homes are harder to sell and harder to buy.  For the same reasons, buy to let mortgages are more in demand.  However, if you don’t know what you’re doing, you can easily get your fingers burnt.  If you are hoping to get into the buy to let market, your first step should be to look for buy to let mortgage advice.

So why should this help you get the best buy to let mortgage for you?  The reason is that buy to let mortgage advice will look not just at the property you are thinking of buying, but at your overall financial situation and how this type of investment fits into it.

• Initially, getting the best buy to let mortgage deal will depend on how much you can raise as a deposit.  The adviser will suggest that you should be able to provide a deposit of 15-20 per cent of the purchase price.
• Different lenders have different exclusions according to the type of property being lent on.  The type of property can dictate the mortgage you can get, and many lenders have very specialised requirements.  If you obtain buy to let mortgage advice from a specialist broker, it will help you make an informed decision and should prevent you from wasting time and money by approaching the wrong lender for your requirements.
• Good buy to let mortgage advice will look at your level of risk tolerance.  No buy to let investment is entirely risk free, as there are so many factors outside your control, such as interest rates and market fluctuations.  Unexpected rises in interest rates can have a major impact on your business and could potentially wipe out your profits.  However, the type of area, the type of property and the type of target tenant you choose can all affect the level of risk.  The adviser will discuss with you what type of mortgage – e.g. fixed rate or variable rate – will best suit the level of risk you are willing to take.
• Really good buy to let mortgage advice will also take into account your life situation and your personal aspirations.  The adviser will discuss your target age for retirement, and whether you wish your investments to have paid out by then, or whether you want them to provide income in retirement.  The adviser can also help you be clear about whether you are looking for an immediate cash flow, or whether you want investments that will pay off in the long term.  This will influence your choice of mortgage, whether it’s an interest-only mortgage, a long-term repayment mortgage, etc.

It’s difficult to take an objective view of your own life.  But looking at how your buy to let investment is going to fit in with your overall goals is a far better idea than just grabbing a buy to let mortgage because you have spotted a property that looks attractive.  A good specialist broker can provide buy to let mortgage advice that will not only save you time and money, but enhance your life chances too.�

Buy to let mortgage advice

There is hardly a day that passes without some newspaper, journalist, or the property expert from the local pub reciting how bad the property market has got. In the main, the people who are most vocal about the future of the housing market often don’t own a house. These self-proclaimed experts have just got their teeth into buy to let mortgage advice from a free newspaper while they sit on a train.

The well informed investor will know the pitfalls of the property market because it is in their interest to do so. House prices have risen quickly and in some cases doubled over a short period of time but that does not mean they will fall at the same speed. The land registry is reporting a decrease in property prices but the papers forget to mention that the number of sales are, in the main, just slowing down. The uncertainty in the property market means that the only people selling at the moment are those who have no choice and are forced into reducing the prices of their property. 

A good investor who is feeling nervous should take the appropriate buy to let mortgage advice and look for ways to reduce their costs and increase their rental yields. The problems in the financial world are having an effect on daily lives but they do not mean the property market cannot manage to sustain itself.

Not enough houses
There are not enough properties in this country. Only a few months ago the newspapers and the all knowing man in the pub were talking about the terrible lack of houses in places people want to live. This is still true. In the United Kingdom, there is far more demand for houses than properties available. The government has so many planning restrictions and there is a huge shortage of land. This means that the current fall in house prices in some areas is a reflection of the banks reluctance to lend. In the case of inner city flats gross overpricing and a lack of people wanting to buy is creating a superficial drop in prices. The need for houses is growing and with the right buy to let mortgage advice, investors should be able to navigate through any problems.

Growth of individual households
The increased population of this country created by the vast numbers of people who want to live in the United Kingdom will continue to mean that more houses are needed in this country.

It may not be a pleasant statistic, but the increased divorce rates and the vast numbers of people choosing for many different reasons, to stay single has meant that the already high demand for housing is increased by the creation of even more households. As long as the demand for houses far outstrips the supply, even if there is a dip in house prices with the right buy to let mortgage advice investors should be able to do survive all the doom and gloom merchants and pub experts.

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