Innovative Buy to Let loansMake Text Bigger
Albert Einstein has many famous quotes and I am quite fond of this one: “In the middle of difficulty lies opportunity”.
This is particularly true of the buy to let market right now and here are a couple of statistics to demonstrate opportunity:
- Gross buy to let mortgage advances grew by 23% in 2014, compared to the previous year (source: CML).
- UK House Prices grew by 8.5% in 2014. Of the English regions, it was Greater London, South East and East Anglia that saw the greatest annual change in property prices (source: Halifax House Price Index, seasonally adjusted data)..
Most market commentators predict continued increase in house prices going forward and with a shortage in housing stock and a rise in the rental market, this should be good for rental yields as well. Perhaps this is why 27% of landlords intend to buy at least one property in the next 12 months (source BDRC Continental) to take advantage of market opportunities.
Yet some landlords still face problems and may miss out on these opportunities.
For example, 38% of landlords said lending criteria is one of the biggest barriers to property investment. Others don’t have the deposit for as new buy to let mortgage, or they don’t want to remortgage because they are tied into a fixed rate.
But in the middle of such problems lies an opportunity.
We have clients who have raised capital with a Buy To Let Equity Loan. This is an innovative second charge loan with no monthly payments. Instead, landlords repay a share in any equity growth achieved over the term of the loan.
Being a second charge there is no need to disturb the existing mortgage and because there are no monthly payments, there is no additional stress test on rental assessment.
Such a solution is not suitable for every landlord but it is great to have such an option to help solve ongoing problems that landlords face when raising capital to buy a new investment property.
When I refer to Landlords I include those that have decided to move and live abroad as this option is also available to Ex-Pats subject to meeting certain criteria. We know Ex-Pats are somewhat excluded from many finance options but again consideration is given with particular lender.
Therefore for those of you who want to re-invest in the housing market at a time when property prices are rising, but feel you have explored all options why not consider a 2nd Charge?
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