Tag Archives: interest only

Minimising Capital Gains Tax – Readers Question Latest Articles, Tax & Accountancy, Tax and Accountancy

Minimising Capital Gains TaxMy wife and I own a semi-commercial property where the ground floor commercial unit is occupied by a mini cab firm and the 2 x upper floors provide for a separate self contained residential unit. I have a commercial loan on the property as a whole, which recently, after five years of being on an interest only mortgage basis, has changed to capital and interest repayments with a 20 year remaining term, with no early repayment penalties.  Continue reading Minimising Capital Gains Tax – Readers Question


Letting to Family Member Latest Articles, UK Property Forum for Buy to Let Landlords

Letting to Family MemberI would really value some advice about letting to a family member please.

I have recently retired and purchased a “retirement home” for my wife and myself.

My intention is to let my current property to my daughter and I have consequently contacted my mortgage provider (Woolwich – Barclays) for permission to do this. Reading the application form that I received from them suggests that consent will not be given as my daughter is currently in receipt of Housing Benefit (£970 / month). Continue reading Letting to Family Member


Lowest ever BTL interest rates released! Cautionary Tales, Financial Advice, Guest Articles, Guest Columns, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies, Property Market News, Property News, UK Property Forum for Buy to Let Landlords

Lowest ever BTL interest rates released!“Lowest ever BTL interest rates released!”

It’s a great headline grabber isn’t it?

Well I actually saw this on another property forum and I thought I ought to respond. Continue reading Lowest ever BTL interest rates released!


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

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

Ying and Yang imageA 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.


Can I stop repossession with a lease option offer? Latest Articles

Stop repossession with view to lease optionI need some advice on stopping a repossession for a motivated seller with a view to getting the property on an option. Property is listed as a 3 bed but has been converted to a 4 bed. £285000 on an interest only mortgage + £17000 in arrears. 4 beds in this area range from £330000-£400000.

Seller is unemployed, 58 yrs old and has failed in previous payment schemes set up for him by bank. Bank is concerned about his lack of funds and him nearing retirement age on an interest only mortgage.

I have a letter of authority and have spoke with bank as a friend of the seller but have been asked to put forward a proposal to them on how we wish to proceed.

There is difficulty in setting up another payment plan in sellers name because he is in need of assistance from council to be re-housed and feels that he must either be repossessed or have another party officially registered as taking over the property to get assistance from the council.

Can you please suggest a sensible way to structure this deal? I’d really like to help this seller and this would also be my first ever deal. Really want to get a deal under my belt for the experience.

Thanks

Marlon Fox

 


Is he a landlord? Landlord News, Latest Articles, Property News, UK Property Forum for Buy to Let Landlords

Is he a landlord?My partner’s ex-wife & their son reside in the ex-marital home, courtesy of the divorce agreement. She is required to maintain it & keep it in the (good) condition it was in when he vacated in 2006. This situation will remain until 2016.

Anecdotally, we know that the property is not being maintained, internally or externally, and we have just discovered that the gas boiler broke down & has not been used for at least a year. They keep warm with halogen heaters (we have been told) but we have no knowledge of how the water is heated, if at all.

My partner is not allowed any access to the property, unless by invitation, to check the situation but is concerned that he could be viewed as ‘landlord’ and be liable for things like gas safety. His ex-wife will not ‘invite’ him inside but from the doorstep we can smell damp when the front door is opened.

For info, the property has a small o/s interest only mortgage. Ex-wife supplies a certificate of buildings insurance annually. Mortgage is is my partner’s sole name.

Thank you

Sharon Jones


Holiday Lets purchased using commercial finance on the increase Commercial Finance, Landlord News, Latest Articles, Property News

holidayMembers of The National Association of Commercial Finance Brokers (NACFB) have reported a steady increase in Holiday lets being purchased using commercial finance along with the number of lenders and products to support this business.

Investors and Lenders are being attracted by the higher potential income that can be generated by holiday lets in locations of strong demand, seeing this as a good income generator for investors and lowering the perceived risk to lenders’ security.

As reported recently by the Independent “the second home sector grew again last year. The rise means there are now over a quarter of a million homes across England that have been brought as holiday homes or lets.”

It is important to determine what the property is to be used for and to make the distinction between a Buy to Let (which will be let on assured short-hold tenancies) and a holiday let, which will allow the owner to use the property for holidays and to let out for short-term.

Lenders are now offering specific mortgage packages to support this growth in popularity of holiday lets, recognising the appetite of borrowers for second homes, and Brooklands commercial finance have sought out examples for us of some of the best deals and criteria currently on the market:

  • Rates from 3.65%
  • LTV’s up to 75% (100% with additional security)
  • Low arrangement fees (and free valuations in some instances)
  • Interest only available
  • Whole of mainland UK
  • Established and new holiday lets
  • Rental Stress testing at 120% of the mortgage payments
  • Minimum incomes required £20,000 for sole applicant and £30,000 for joint
  • Minimum property values £50,000
  • Maximum property values £500,000 or more with business case
  • First time investors are acceptable.

If you would like any assistance to finance a Holiday Let please email info@property118.com with your requirements and contact number and we will ask our preferred brokers Brooklands commercial finance (members of the NACFB) to assist.

Or call me on 01603 489118

 


Shawbrook Bank the common sense lender Buy to Let News, Commercial Finance, Landlord News, Latest Articles, Property News

Our preferred commercial finance broker Cliff Verrill reports that Shawbrook Bank are driven by common sense not bureaucracy looking for ways of saying yes to clients and not the often received “computer says no” answer he gets from many lenders.

Shawbrook Bank lend on single investment units, portfolios, multi units, HMO’s and student lets. They lend to both individuals and Ltd Co’s and do not limit the amount of properties that the client can own or the business activities of the limited company.

All their arrangement fees have recently been reduced, along with interest rates in the past couple of weeks with further reductions announced today. Continue reading Shawbrook Bank the common sense lender


Shawbrook Bank slash arrangement fees and rates Buy to Let News, Commercial Finance, Landlord News, Latest Articles, Property News

Shawbrook Bank specialists in commercial and BTL finance have reduced their arrangement fees to 1.70% a saving of 0.80%, and their rates by up to 0.60% across their term product range.

Big advantages Shawbrook have over many other commercial lenders is their desire to lend with far less onerous stress testing compared to high street banks, Interest Only for commercial and BTL property and lending directly to Limited companies.

Malcolm Jones of Brooklands commercial finance said ” Shawbrook are specialists in good sense not using a tick box appraoch and allow me direct access to discuss cases with underwriters. This is invaluable when trying to get cases through for clients and they also have excellent turn around times.” Continue reading Shawbrook Bank slash arrangement fees and rates


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