Tag Archives: buytolet

Remember our background is in BuytoLet and Commercial finance Buy to Let News, Commercial Finance, Latest Articles

Mark, Mike and I met through the common background of BuytoLet and Commercial Finance. Over the years through The Money Centre and now Property118 we have literally helped 10s of thousands of Landlords, developers and investors start and grow their property businesses.

Unfortunately we are now old enough to have seen, done and bought the t-shirt for most things in the property finance industry including Mark and Mike being founder members of the NACFB (National Association of Commercial Finance Brokers) and working with Nationwide Building Society and Paragon Mortgages on the concept of Forward Buying Facilities.

We have been sharing our experiences and strategies for property finance as much as we can with readers, but there is always a time when you just need some help.

To start with we have our own BuytoLet mortgage sourcing system and calculator, which we designed ourselves and I keep updated. This will help you see how much you could borrow, what the costs would be and which are the most popular Lenders and Products.

We have a team of highly experienced NACFB member commercial finance Brokers who can advise you on and source the best Commercial, Development finance and BuytoLet deals.

If you need help with…

Buy to Let mortgages : info@property118.com

Commercial Mortgages CLICK HERE

Development Finance CLICK HERE

Bridging Finance CLICK HERE

…. or guidance regarding property finance you can email us on : info@property118.com Call Property118 on: 01603 489118

Or contact me directly on npatterson@property118.com.

A well considered BuytoLet strategy is essential Buy to Let News, Landlord News, Latest Articles

Provision for regular investment into rental properties needs a well considered BuytoLet strategy.

A sensible Rainy Day fund is essential and prudent investors will factor this in when purchasing their rental investment and adopt an on-going approach to property upgrades.

This is very much in keeping with Mark’s advise in the Basic fundamentals of a buy to let property investment strategy.

Standards in the BuytoLet market have improved and tenants are less willing to accept sub standard and unloved properties paying a higher rent for well presented and well located properties. Specification of the property is important and landlords need to consider regular upgrade and maintenance works at the very least between tenancies and every three years.

Zoe Rose, head of lettings for Strutt & Parker said “if you regularly maintain your rental property on an annual basis, even when your tenant is situ, then overall you are likely to spend less than a major upgrade every three to five years. You are also sending a clear message to your tenant that you are a conscientious landlord that cares about them and the property. They in return are likely to look after your investment and appreciate their surroundings and do their very best to keep your property in immaculate order.”

“We do have a few clients that have enjoyed healthy rent increases over three to five years linked to RPI without doing much to their property during the tenancy. When the property comes back to market, they are shocked to learn that they need to spend significant funds in order to support the same level of rent achieved before.”

“Like any investment the return can go up or down and you wouldn’t run any other assets dry and expect to maintain the same level of return. It is the same with rental property. You need to keep aside sufficient funds to upgrade and reinvest in order to optimise the returns.”

Stephanie McMahon said “the increase in the Private Rented Sector across London with 79% more household renting in 2011 than 2001, shows just how large the market is. In these types of conditions investors must put back more to reap the financial benefits. Tenants are looking for longer leases too, with 17% increase in those taking longer leases in the third quarter of 2013. Therefore landlords need to invest more to fight for those tenants.”

“It is much better to plan properly than be stung with an extended void period or accepting a very low rent just to secure a tenant. Having a well thought out maintenance and upgrade plan really does pay dividends in the end.”

The Landlords Calculator designed for Property118 readers is very easy to use and can help you with your own BuytoLet strategy. You don’t need to download any extra software whatsoever. It allows you to analyse returns and other important numbers relating to any residential investment property deal with ease.

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I am purchasing a BuytoLet with the intention of moving in later Latest Articles

I have been offered the opportunity to purchase a property currently containing tenants who are looking to stay for another 12 months.

I would like to buy the property now and then move into it myself when the tenants leave. My dilemma is do I apply for a BuytoLet mortgage or a Residential mortgage for the initial purchase?

I don’t think I can get a Residential mortgage because there are tenants in it even though I will move in in 12 months time, but if I get a BuytoLet mortgage will I be allowed to move? Even if I am allowed BuytoLet interest rates are usually higher than Residential rates.

Any suggestions gratefully received.

BuytoLet Remortgage rates best since the credit crunch Buy to Let News, Landlord News, Latest Articles

The prevailing mood in the BuytoLet remortgage world over the past three or four years has been “Rates are high; criteria are being squeezed; fees are high” – so it’s not been considered financially viable to remortgage.

Therefore Landlords have settled down and put raising equity or just remortgaging for rate to the back of their minds. As this period of natural stagnation has continued, it has reinforced the mood of doing nothing in many landlords’ minds.

If you have built or increased your portfolio in recent years, it is worth regularly reviewing your assets. A quick look at a range of BTL lenders current SVR’s, reveals rates at 4.5% at best, and some as high as 6.58%!

However, things have changed over the past 4 or 5 months, and there are some really competitive rates around. So what should you be paying? What about the fees? Of course, not everyone would qualify for the products below. The usual Terms and Conditions apply etc, but for the many BTL borrowers that would qualify, here is a selection of currently available products concentrating on low lenders arrangement fees. All are at 60%LTV, with the exception being the last example, which is at 65%.

The following example products show:

Rate Type – Lenders Fee – Savings vs SVR at 4.99% on a £100,000 interest only mortgage over 24 months

Sub £300 Arrangement Fee
3.59% Discount for 2 years – Lenders Fee £99 – Saving £2,800
3.74% fixed for 2 years – Lenders Fee £0 – Saving £2,500

Sub £1000 Arrangement Fee
3.29% Tracker for 2 years – Lenders Fee £999 – Saving £3,400
3.39% Fixed for 2 years – Lenders Fee £995 – Saving £3,200

Fees Free (standard legal package and free valuation), Low Arrangement fee
3.65% Tracker for 2 years – Lenders Fee £495 – Saving £2,679
3.59% Fixed for 2 years – Lenders Fee £500 – Saving £2,800

Of course, there are other fees associated with a remortgage, but as you can see, even after they have been paid there is a positive net saving. Despite the above being available at 60/65%, there are many other rates at higher LTV’s that may be suitable for you, and there are BTL deals available up to 85%.

If you need any assistance and to ensure that you receive the very best advice, service and rates please complete your details below and we will have one of our preferred BuytoLet mortgage brokers give you a call.

The Mortgage Works reduce BuytoLet rates Buy to Let News, Landlord News, Latest Articles, Mortgage News, Property News

It was announced in the press that The Mortgage Works has today launched a 2.49% 2 year fixed rate, which is correct, but now I have uploaded all their product changes to our BuytoLet mortgage calculator I can see that is not the real story.

More importantly to most BuytoLet investors the products with a higher Loan to Value size have also been significantly reduced. The less you put in the greater your return on capital!

The 2.49% fixed is only a 60% LTV product with quite a high arrangement fee of 2.5%, however for the experienced investor who knows it is better to have cash saved in the bank than tied up in equity you can not reach on a rainy day, there is better news.

Below are examples of the recent product reductions:

2 year fixed 75% LTV fee £995 WAS 4.49% NOW 3.89%

2 year fixed 80% LTV fee 2.5% WAS 4.69% NOW 4.14%

2 year tracker 75% LTV fee £995 WAS 4.29% NOW 3.79%

If you would like to use our BuytoLet mortgage calculator to work out how much you can borrow on each product and the costs please CLICK HERE

If you would like our preferred mortgage broker to help you decide what is the best BuytoLet mortgage for you and arrange an agreement in principle please fill in your details below.

Contact Howard Reuben
Mortgages, Commercial and Bridging Finance, Life Insurance, Wills, Trusts and LPA's

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Precise Mortgages launch Bridge to Let product Buy to Let News, Commercial Finance, Landlord News, Latest Articles, Property News

The intermediary only lender Precise Mortgages has today launched the Uk’s only true Bridge to Let Product for development and refurbishment BuytoLet projects.

If you take out a Bridging loan with Precise Mortgages you will now be able to switch it into one of their Bridge to Let products (effectively a Buy to Let loan) from month four onwards with no additional valuation or legal fees. Customers will be allowed to take the BTL loan out up to 75% of the property’s post works valuation so, if you have enhanced the value of the property, you will be able to withdraw some or all of your working capital.

The lender has combined its Bridging products with its traditional BTL products. The BTL element offers terms of up to 30 years, on an interest only basis, with no valuation or legal fees, and no need to change lender.

This offers a one stop shop for Development or Refurbishment projects where the plan is to keep the property upon completion of works and let out on a Buy to Let basis.

Standard Bridging rates apply starting at 0.85% per month with the Bridge to Let element starting at 4.39% and the 2% Arrangement Fee can be added to the loan.

Prime Bridge to Let product and Criteria details:

Rates from 4.39% reverting to Libor (currently 0.51%) plus 4.98%
Maximum LTV 75% of the post works valuation
Product fee 2% on all products and can be added to the loan
Max Loan size £500,000 for 75% LTV or £1,000,000 for 70% LTV
No Minimum income requirements, but must be employed/self employed and supply last 3 months bank statements
Rental income must cover 125% of the interest payment or reversion rate which ever is the higher
Age range 25 to 75
Maximum 1 property with Precise mortgages, but unlimited portfolio size with other lenders

Near Prime Bridge to Let Product and Criteria details:

Allowable adverse Credit
Defaults – none in last 12 months with max 1 default in the last 24 months (max £1500)
CCJs – none in last 12 months with max 1 default in the last 24 months (max £1500)
Arrears – none in last 12 months and maximum 1 month in the last 36
Rates from 5.39%
Maximum 1 property with Precise mortgages, but unlimited portfolio size with other lenders

If you would like our preferred broker to help raise finance for the above type of project please complete the form below and provide a short overview of the deal and your requirements or call us on 01603 489118 and we will do our very best to help.

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Second charge BuytoLet loans via Shawbrook Buy to Let News, Commercial Finance, Landlord News, Latest Articles, Property News

I received an email today from Shawbrook outlining their Secured BuytoLet Loans which on first glance I nearly ignored as I normally do for other second charge lenders.

On second thought though it struck me that I get a lot of questions from readers who would like to raise equity, but either do not want to remortgage as they are locked into extremely attractive tracker rates from the pre-credit crunch days, or their existing lender no longer offers further advances.

Therefore despite the high interest rate at 9.95%, which I would normally tell people to avoid, it could be possible that by not moving the whole mortgage a small amount extra on a higher rate might actually be more cost effective.

Shawbrook while only dealing direct with brokers are becoming a popular lender of choice for more difficult BuytoLet and commercial deals.

I asked Howard Reuben of HDconsultants if a lender like Mortgage Express, who are desperate to find any excuse to enforce redemption of a BuytoLet mortgage, if it was possible they would then see the borrower as in default of their terms and conditions. The response upon investigation was not clear cut:

“We have not heard of any such foreclosures on the basis that a 2nd charge was implemented, but could not state categorically that a lender would not consider this action in the future though as it is assumed that it all depends on the lenders attitude towards their borrowers at that time. However the product, which has actually been available for quite a while now, is a successful product. Borrowers should of course be advised of all potential pros and cons – which is down to the Adviser.”

Shawbrook BuytoLet Secured Loan cost and criteria:

Interest Rate 9.95%
Lender fee £1,250
Maximum LTV 65% including existing mortgage
Maximum number of properties in a borrowers portfolio of 3
Early repayment charges 3% first 5 years and 1% thereafter
Stress tested so rent has to cover 110% of existing mortgage and new loan
Min Loan size £5,000 Max Loan size £75,000
For residential investment properties only – no DSS or HMOs
Max age 80 years old
Max term 25 years

To summarise the costs are high, the criteria strict, the LTV low and certainly should only be considered in the right circumstances. Although as you can tell I am certainly not going to sell anyone on the idea I thought it was interesting to discuss this type of product considering my first reaction was just to delete it out of my inbox.

Please let me know what you think if you have an opinion by leaving a comment below.

To search for a Buy to Let mortgage and Calculate how much you can borrow please Click Here

If you would like any advice from our recommended mortgage broker please do not hesitate to contact me on 01603 489118 or info@property118.com

Leeds Building Society BuytoLet rates cut by up to 0.7% Buy to Let News, Landlord News, Latest Articles, Property News

Low Value Buy to Let mortgages The Leeds Building Society has cut its BuytoLet rates buy up to 0.7% on selected products whilst keeping low fixed fees and continuing to offer products at 80% Loan to Value.

Headline rates include:

3.29% 2 year discount followed by a 3 year discount at 4.99%. (This is based on the Leeds variable rate of 5.99% minus 2.7% for 2 years and minus 1% for the next 3 years) Reverting then to the Variable rate at 5.99% for the term of the loan.Maximum LTV 70%, Completion fee £800 and booking fee £199, Tapered early repayment charges of 4% year 1 and 3% year 2 only.

4.99% 2 year fixed 80% LTV until 31/08/2015 followed by 4.99% discounted until 31/08/2018 reverting to the variable rate at 5.99% for the term of the mortgage. Completion fee £800 and booking fee £199. Tapered early repayment charges until 31/08/2015

Kim Rebecchi, Leeds Building Society Sales and Marketing Director said: “We are very pleased to support landlords and with interest rates at a historic low, we believe it’s a good time to lock into a low fixed rate for greater certainty of cash flow.”

“Our 2 Year fixed rate buy to let deal has no higher lending charge, and allows 10% capital repayments each year without penalty.”

“Landlords are faced with a plethora of mortgage products and many lenders have chosen to introduce lower rates at the expense of higher product fee. I’m delighted to be making genuine reductions that support our customers – our fees remain unchanged.”

Standard Leeds Criteria:

Rental stress testing at 125% interest cover on 5.99% notional rate = You can borrow 160.26 times the monthly rental
Min Property value £50,000 or £85,000 with a London postcode and £70,000 in the South East
Maximum portfolio size regardless of Lender = 4
Minimum income for applicants of £20,000 per annum

To search for more of the most popular BuytoLet products and Lenders including how much you can borrow please feel free to use our BuytoLet Mortgage Calulator CLICK HERE

If you require assistance on a BuytoLet purchase or remortgage please email info@property118.com or call us on 01603 489118

Interest only or Repayment BuytoLet mortgages Advice, Buy to Let News, Landlord News, Latest Articles, Property News

A common question from new Landlords is why are so many BuytoLet mortgages taken out on an Interest only basis rather than Capital and Repayment.

First of all it helps to understand that a BuytoLet mortgage seems very similar to a Residential mortgage, but it is not regulated in the same way by the Financial Conduct Authority FCA (the FCA has now replaced the FSA). This is because it is treated as a commercial loan, and investors are assumed to have a greater understanding of the commitments they are entering into than someone who may have no financial understanding buying their own main residence. The key is that a BuytoLet is seen by regulators as a business loan and BuytoLet investors should treat their property purchases using a mortgage as a business themselves.

If you were to offer any business, no matter what the industry, the option of:

a loan on Interest only with lower monthly payments or
a capital and repayment loan with higher monthly commitments but a reducing balance

Nearly every business would choose Interest only, because as the saying goes “Cashflow is King”

Now in practical terms, the biggest risk to a landlord is not being able to make the monthly mortgage payments. Therefore this risk is reduced using Interest only.

But what about reducing the loan size I hear you cry.

Interest only should hopefully produce a cash flow surplus on a reasonable yielding property and this should then be saved in a separate account for a rainy day to cover future mortgage payments, or used at your convenience to pay lump sums off the mortgage when there are no redemption penalties.

The control is now in your hands and not the lenders, vastly reducing your exposure to risk. If you take out an interest only loan it is easy to get the lender to convert this to Capital and Repayment, but the reverse is true with lenders being reluctant to convert a mortgage to interest only from Capital Repayment when you need to.

If you are sensible and treat all your rental income as part of the business e.g. don’t rush out on holidays or buy a Ferrari, you can now manage your cash flow and total debt outstanding yourself.

It is important to note that this strategy is not available or right in all circumstances, but a summary of why it is extremely popular for BuytoLet investors.

If you would like to view the most popular Buytolet mortgages available in the market today, see how much you can borrow and what it would cost please feel free to CLICK HERE for our BuytoLet mortgage calculator.

Funding for Lending scheme changes allow BuytoLet investment Buy to Let News, Landlord News, Latest Articles, Property News

The Bank of England Funding for Lending scheme will now allow Small and Medium sized enterpises (SMEs) to lend the money available on to property investors.

The Funding for lending scheme has been extended another year until January 2015 and from 2014 banks will be able to borrow £10 of cheap Bank of England money for every £1 the lend to SMEs. This has double the previous allowance of £5 for every £1 banks lend.

This doubling of incentive to try and stimulate the economy could have a very positive effect for property investors for the first time as Buy to Let is still seen as relatively low risk by banks compared to taking an educated gamble on a start up business.

Rob Wood, chief UK economist at Berenberg Bank, said ‘It could be a no-brainer. Lend to a landlord and get 10 times that lending back as essentially free funding, then recycle some of that back out again on mortgages or BuytoLet.’

£80 billion has been set aside by The Bank of England for this scheme to kick start the economy and get lending available to business, but to date the take up by banks has been disappointing with £14 billion being taken between August and December last year. However it is hoped that the extended scheme and greater incentive will boost the take up and for the Private Rental Sector add a much needed injection of competitive financing.