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London Mortgage and Finance Information |
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Buy to Let Mortgages – Is this a good time to buy? |
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| The strict controls on the mortgage market are making the first time buyer a
rare breed and more people are being forced off the residential property ladder for various reasons
ranging from affordability to credit issues. |
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| In most cases a potential buyer needs a minimum deposit of 15% before they can
even think about becoming a property owner and the result is property ownership is no longer in reach of
many people who once thought owning their home would be a formality. |
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| Consequently the buy to let market has seen a more than encouraging increase in
rental values. |
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| Nationwide has just reported rental demand is now at a 8 year high and Quarter
4 has seen a 12% increase in demand for buy to let mortgages. Before the financial crisis, the majority of
'buy to let' landlords bought property for the potential capital growth with the monthly rental
hopefully covering the interest payment. |
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| But now with interest rates still at an all time low and looking to stay low,
the yields on property rentals are looking very attractive. In addition it is a brave man who thinks that
property prices (especially within the M25 region) will not increase over a 5-10 year period so capital
growth should not be ignored. |
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| For the last 3 years the interest rates offered by the ‘Buy to Let ‘ mortgage
lenders have been to say the least, on the high side, and those rates that looked competitive came with a
fee of up to 3.5%! |
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| That is now changing, with some liquidity returning to the banking sector, we
have seen both BM Solution, Coventry Building Society (Godiva mortgages) and Platform Home loans launch
attractive rates with lower arrangement fees. Although a sizeable deposit (minimum 20% and up to 40%)
is needed to qualify for a buy to let mortgage. |
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| Any good investment portfolio should include property, traditionally the
backbone to any investment strategy. With interest rates looking to stay low for the foreseeable future is
deposit based investment the place for your money and is it time for the property investor to start buying? |
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