Don’t get car­ried away with cheap mort­gages

The Wharf - - Property - Of Dawn San­doval Res­i­den­tial

Buy-to-let has been one of the most suc­cess­ful in­vest­ments of the past 20 years but, sadly, over the last few months land­lords have dealt a se­ries of blows.

With the prospect of an end to mort­gage in­ter­est re­lief and in­creas­ing Stamp Duty costs as well as cut­ting wear and tear al­lowances, rent­ing prop­erty is be­com­ing less at­trac­tive.

How­ever, af­ter so much doom and gloom there could be some good news on the hori­zon.

Rates for buy-to-let mort­gages have fallen to record lows, ac­cord­ing to some com­par­i­son web­sites. The av­er­age two-year fixed rate prod­uct has fallen from 5.21% way back in April 2011 to 3.32% this month while the av­er­age five-year fix has fallen from 6.24% in 2011 to 4% to­day.

That’s good news given sav­ings rates are cur­rently so poor that many are look­ing else­where to fund their re­tire­ment.

Lenders have tried to cap­i­talise on this new pool of cash by of­fer­ing some of the best rates the buy-to-let sec­tor has ever seen.

In ad­di­tion, providers also cut rates in the run-up to the Stamp Duty changes in or­der to at­tract those keen to buy be­fore they were im­ple­mented, which has fur­ther ac­cel­er­ated the downward slide in rates.

While the new rules and tax changes could po­ten­tially take the shine off buy-to-let, prop­erty is still re­garded as a safe bet and with rental homes in de­mand and rent high, it still re­mains an at­trac­tive propo­si­tion in the light of cheap mort­gages.

Do con­sider though that while buy-to-let rates may have hit an all-time low for in­vestors, bor­row­ers should re­mem­ber they will now be fac­ing tighter lend­ing rules, in­clud­ing stricter af­ford­abil­ity checks as a re­sult of the Euro­pean Union’s mort­gage credit direc­tive.

So it’s im­por­tant to seek pro­fes­sional fi­nan­cial ad­vice to see if buy-to-let re­ally is the right op­tion for you be­fore get­ting car­ried away with the idea of be­ing a prop­erty ty­coon. LL is hop­ing to build on the suc­cess of its Ca­nary Wharf op­er­a­tion fol­low­ing the re­cent ar­rival of sales chief Michael Whit­taker.

The di­rec­tor of res­i­den­tial sales started at the West­ferry Cir­cus of­fice in Jan­uary, mov­ing from his pre­vi­ous po­si­tion as area part­ner at Felic­ity J Lord.

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