Don’t get carried away with cheap mortgages
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.