Number of buy-to-let mortgages available hits 1,000

I don't get why you are saying the gurus that proposed leverage to build a portfolio were wrong. Under the old tax scheme they were touting a viable for some business model. The only change is the new tax laws that make that model obsolete (in my opinion). They can hardly be blamed for that - the blame lies with George Osborne for making a tax grab that will benefit his very wealthy pals (the large scale landlords with no mortgages who will now be able to mop up).

Absolutely Jason. Without highly-geared landlords far fewer homes would have been built and far fewer tatty, old houses (often neglected by the saintly, sacrosanct owner-occupiers) would have brought back into occupation by being fabulously renovated and made safe by portfolio landlords.
(people should watch fewer of the 'rogue landlord' programmes and more of the 'Homes under the Hammer' type - as the latter show the kind of renovations we do)
As you say, the model is perfectly fine without the discriminatory tax change. If landlords had always bought houses outright for cash (the only viable model once the change comes into force and for which people will have to be very rich unless they only buy one) we'd have far fewer houses now fit for habitation.
There is now an implicit and sometimes explicit criticism of landlords who buy more than one house to rent out (the Chancellor was idiotic to voice this prejudice as well), but it is fine to own more than one bicycle shop or cafe. Why? If it is wrong to make money out of providing an essential service, then what about making money from railway services (''they should be free, as people need them to get to work!') etc?

Careful what you wish for Ros. ....If you are going to compare the PRS to essential services such as rail and energy.....you will find rent caps being introduced on rents.....those other services all suffer from a degree of price capping 🙁

A HPC regular poster, bland unsight, has published a kindle book about BTL. I have read it.

http://www.amazon.co.uk/goodbye-all-that-buy---let-ebook/dp/B014N2E9H0

"A shobolerant (short book-length rant) in two unequal parts detailing the rise and anticipated decline of the UK buy-to-let sector. In the first shorter part an analysis of the political and regulatory direction of travel which proposes that the buy-to-let sector will soon be gone. In the second longer part and analysis of how changes to bank lending practices, in particular the emergence of cheap interest-only loans to buy-to-let investors led to a generation of priced out aspiring owner-occupiers compelled by the structure of mortgage lending to rent from the banks with speculative investors providing a smokescreen behind which the economic truth of the matter is hidden.

In addition to the analysis the book is a love letter to the abstract notion of the forum at http://www.housepricecrash.co.uk and an attempt to explain to the husbands, wives, boyfriends and girlfriends of its posters exactly why the hell so many people spent so much time on-line talking about house prices."

HSBC is chasing a bit more of the market too

http://t.co/C3KqOVgg34

Changes to HSBC’s Buy To Let mortgage policy include:
 Opening the range to non-HSBC customers and standalone applications;
 Reducing the rental cover required to 125% from 130%;
 Increasing the maximum LTV on Buy To Let further advances to 75% from 60% LTV; and
 Assessing the Buy To Let mortgage application on rental income only.

“The availability of Buy To Let products is now at its highest point since 2008. High rents and low interest rates mean customers are increasingly seeing Buy To Let as an attractive investment opportunity. The policy and pricing changes we have made will make our range available to even more people.”

To put in a nutshell, when it comes to investing in property you have to keep your costs as low as possible which includes your mortgage costs.

Why make life difficult by making monthly payments that are higher than need be.

I would recommend always going with an interest only mortgage

True you can release equity to the property with a repayment mortgage but the costs will be high every month because you are paying the interest as well as the actual price/value of the property.

the true money investors make is through remortgaging the property. With an interest only mortgage, the tenant is paying the mortgage plus gaining a little bit of profit for yourself. give it 1-2 years and then you can remortgage the property based on its actual value to date. the property value will go up and you will receive a lump sum that you can invest into another property.

check out my blog for more info: http://realestateforyouallc.ipage.com/

Reply to the comment left by "Nourdine Streather" at "07/09/2015 - 17:16":

That's all very well if you have a long term strategy to continually build your portfolio and expect to sell it in the longer term. But if you are developing a retirement business and hope to retire in the foreseeable future the sums simply don't add up. With an interest only mortgage you pay twice as much in interest over the period and don't even own the property at the end of it. What's the point of that?

Hi Alison,

Interest only doesn't stop you from paying capital off the loan, but it does give you options to do it as and when it suits you.

In any business cashflow is the most important/critical limitation so interest only keeps the stress on the business as low as possible.

Just imagine if you had a boiler blow and the tenant stopped paying the mortgage. You would then be grateful for lower committed outgoings.

I hope that helps 🙂

Reply to the comment left by "Neil Patterson" at "20/09/2015 - 15:38":

Well. I agree Neil. Some interest only mortgages allow the loan to be paid off as fast or even faster than a repayment mortgage when times are good with the flexibility to slow down if times become more difficult.
It's the overall strategy that's different between those who are looking for growth and those looking for retirement income. The tax changes make the latter strategy look comparatively better than it used to.