Buy-to-let
If you could invest in rental property anywhere in the country, where would you choose?
London, for the high demand and premium prices? Somewhere in the South East, where buy-to-let activity has always been high?
Well, both of those would be good choices, but neither compare to the leading location, in terms of return on investment.
According to haart, the best place to invest is Peterborough. Haart’s monthly Yield Index reveals that yearly returns on one to three-bedroom properties in Peterborough are the highest in the country. The yield can be as large as 9% per annum, for a two-bedroom apartment.
It’s no surprise then, that the East of England as a whole, including Cambridge, currently offers the best rental yields out of any area in the country, followed by the East Midlands and South Yorkshire. A bit more surprising that London comes fourth, although that’s still high on the list.
It’s not just the recent stats from haart that commend Peterborough to prospective landlords. I can speak from personal experience. I spent five years living in the town, and own two buy-to-let properties there. Want to know how I have found it?
Both my properties have been serviced well. I have never had a void period longer than two weeks, and both rental income and capital value have increased over that period. Also, with the price being a lot lighter, I got a bigger property for my money than I would have in a lot of other places.
So it’s thumbs up from me for Peterborough as a place to buy-to-let. If you want any help getting started as a Landlord – in the East of England or anywhere – don’t hesitate to get in touch.
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We always stress the importance of involving your accountant as early as possible in the house buying process. This has not changed – if anything it has become even more essential for the self-employed.
Now, when you apply for a mortgage, there are even more back office checks being done. For example, the Mortgage Verification Scheme (MVS) kicked in fully this month. Under the MVS, mortgage lenders send details of borrowers to HM Revenue and Customs who crosscheck it against their tax returns.
It is a good thing that a variety of fraud systems, such as the MVS, are in place. Our only worry is that a mortgage lender might be fixated on a self-employed person’s net profit, without understanding their income situation properly.
For example, a client might have a contract go wrong and end up losing £50,000 of her net profit, but this could clearly be a position that will not repeat itself the next year.
As a general rule if you are self-employed it helps to request an SA302 in advance of your mortgage appointment. This is your tax calculation from HMRC.
Individual circumstances are the reason to involve an accountant early on. An accountant may be able to shed some light on your ongoing financial situation where the black and white of a computer system fails.
For more information contact Limetree Financial Services.
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One of the most significant factors for a healthy mortgage market is the loan-to-value percentage (LTV). This is the proportion of the value of a property that a lender will loan to you. The rest you have to have up front as a deposit.
The less the lenders will loan, the more cash you need to begin with. When lenders reduce the LTV on their mortgages, homebuyers without a big deposit are stuck. First time buyers in particular have no way of getting the loan they need.
That’s why we rejoiced back in the summer when some lenders reintroduced 95% mortgages, causing others to improve the competitiveness of their 90% products.
A couple of months later Aldermore came up with a limited no-deposit-required mortgage for first-time buyers, which works by requiring a family member to act as a guarantor.
These are encouraging signs, but until now the news has not been so good for landlords wishing to borrow for buy-to-let. Is that about to change? Kent Reliance is now offering a buy-to-let deal at 85% LTV.
It shows how reluctant lending still is for landlords that this Kent Reliance mortgage is the only one at 85% LTV for buy-to-let. But it can only be a positive step.
While investors should not underestimate the costs associated with becoming landlords, this deal is what the market desperately needs. It is certainly a step forward for the buy-to-let sector.
The 85% buy-to-let mortgage is likely to be popular and only limited funds are available. If you are interested, let us know as soon as possible, in case it is not available for long.
Limetree is happy to advise you on buy-to-let mortgages. Talk to us today.
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Ever wondered why you need a mortgage broker?
Can’t you just walk into a high street bank for a loan, or phone the number you saw on the TV?
Of course you can, but your choice will be severely limited. There are thousands of mortgages out there, for people in all sorts of different situations. Fixed rate, variable rate, tracker mortgages, capped and collared…
With interest-only mortgages, you only pay back interest on the loan. With repayment mortgages, you pay back both the interest and the capital that you borrowed over the term of the loan.
Ah yes, the repayment term – how long should that be? And do you want a short term discounted deal or something that you don’t have to look at again in a few years?
What about up-front fees and the all-important deposit question – how much loan-to-value do you need to borrow?
There are other considerations too. Some lenders offer cashback. You might want flexibility in your payment schedule. If you have a decent amount of savings then now might be a good time to offset your mortgage.
The possibilities are vast. You might know what you need and are just trying to find it, or you might not know what – if anything – suits your situation the best.
We know. And that’s the point of mortgage brokers. We understand how all these different mortgages work. We know the different lenders – the ones that are hidden from sight as well as the ones on the high street.
In fact, there are thousands of mortgage products that are only known to mortgage brokers. In the last half a year alone, 3,900 new products have become available to us – products that you can’t get directly as a borrower.
Brokers find the best deal from all of the mortgages available.
So if you want real choice, talk to a broker. We can find the best mortgage for your unique situation, and get it set up as smoothly as possible. We are impartial, and the advice is free. Let us know what you need and we will do our best to help.
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Northern Rock spent the summer vigorously adjusting their rates and incentives to appeal to customers right across the borrowing spectrum.
In August they reduced interest rates in a bid to attract more first-time buyers and those who are remortgaging. They also extended their cashback incentive to a selection of their buy-to-let mortgages, hoping to entice landlords into borrowing from them.
Rates have come down by as much as 0.9% on mortgages for both purchase and remortgage customers, and better value loans with no product fees are also available for those wishing to keep initial costs down.
For first-time buyers Northern Rock have reduced selected mortgage rates on products with higher loan-to-value, including the 90% LTV.
And they have not forgotten the buy-to-let market: they are offering a £500 cashback incentive, already given with many of their other products, on all buy-to-let mortgages with percentage fees.
Safe hands
We are always glad for our customers when better deals come to the market, and especially when the lender is Northern Rock. Don’t forget, now that the company is effectively state-owned, there is no safer lender out there.
If you would like to know full details of the Northern Rock offers and whether there is one to suit your situation, we would love to talk to you.
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