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Market Leading Buy to Let Rates

101: Things we DO like to talk about. 

Buy to Lets. 

The Buy to let market can be a little intimidating, not many people know all that much about it, but in the currently depressed housing market a buy to let can be picked up quite cheaply.

With first time buyers finding it difficult to get on the mortgage ladder and buy their first home there is an ever increasing need for rented housing.

Locally in Newark and Nottingham there is very strong demand for rental properties in and around employment centres, with strong rents from incoming migrant workers unable to get on the mortgage ladder, with little or no deposit.

Buy to Let mortgages come in two basic flavours:

The first is the more difficult to get hold of, where the lender basis the loan not on the property but on the person borrowing. These are not the mainstream of buy to lets, but are often the best deals.

The much more common is the standard buy to let mortgage, where the mortgage is based on the properties ability to wash its own face, or rather that the rental is sufficient to pay the mortgage plus a small amount. Usually the calculation used by the lenders is 125%, in other words the rental assed by the valuer must be at least 125% of the mortgage payment based on a an interest only loan.

After this basic criteria there really is not much more to it, there are nuances for each lender, for example, some lenders will not accept any applications from first time landlords, whereas others have special deals for such. The Maximum number of properties available under one particular lender can vary widely with some lenders only allowing 3 properties to some allowing any number up to a total value of £3,000,000 or more.

There are a few other things to consider, usually buy to lets are not regulated buy the Financial Services Authority unless special conditions apply, such as the property will be let to a relative, and therefore some lenders will not consider this type of buy to let. However, in most circumstances this should not affect the manor of the advice you receive.

Currently the Market leading 2 year buy to let mortgage is 3.39% fixed until 31.08.2014 with a maximum Loan to Value of 60%. Which has been launched today, by one of the mainstream buy to let lenders.

Usually the maximum loan to value is 75%, meaning that the lenders usually expect you to be able to deposit at least 25%. However, there are executions to most rules and this is no different, some lenders do offer some schemes with an 80% Loan to value maximum.

Beware of the fees: Buy to lets tend to be slightly more expensive than standard mortgages, recently the interest rates for buy to lets have been running at what appear to be quite low interest rates but beware the fees on buy to lets can be high with some lenders charging percentage based fees.

Most lenders do not expect you to instruct an agent to run the property, just an Assured Short-hold Tenancy agreement with the tenant, which can be downloaded from the net or picked up from your local WHSmiths. This is a very standard landlord and tenant agreement protecting both of you.

There is also the possibility of Let to Buy, this is where you let out your existing property to enable you to purchase a new home as your main residence. Most buy to let lenders have special criteria and deals available for this type of buy to let. The big benefit of this type of arrangement is the ability to brake the chain and not have to sell off your property, given the current market this is a very viable option for most people to consider.

If you would like more information on Buy to Lets, Let to Buy’s, the 2 year deal mentioned above or other financial or mortgage advice, please contact us on 01636 870 069 for your free consultation.

Philip Dales Cert PFS Certs CII (MP & ER)
www.pndales.co.uk

DALES Independent Financial Advisors, are a whole of market mortgage broker and independent financial advisors. Authorised and Regulated by the Financial Services Authority.  The Financial Services authority do not usually regulate Buy to Let mortgages.

By admin Mortgages • Uncategorised • Updates 0 Comments

MORTGAGE BEST BUYS, 2 year deals


Mortgage Best Buys – 11th May 2011

Current 2 year best buys, based on a 65% Loan To Value.

FIXED RATES

TMW (The Mortgage Works) – 2.75% fixed until 31/07/13 – total fees of £1,036 (in valuation)

Woolwich – 3.08% with a 20 month Fixed rate – total fees of £948.93

L&G – Leeds Building Soc with a 4.69% fixed until 31/05/2013 – total fees of £559 (inc valuation)

Newcastle Building Soc with a 4.64% fixed until 30/06/2013, but the fees increase to £1,350 (inc valuation)

Trackers

Coventry -2.29% – bank base +1.79% for 25 months – total fees of £1,012

Nationwide – 2.75% – Bank Base +2.25% for 5 years fees are very low at £124

These are just best buys, they are only shown as an example of the type of rates available, you should always seek advice when buying a mortgage. As Independent Financial Advisers, we are able to select and advise from the Whole of the Market.

The loans above are based on a 65% loan to value on a house costing £250,000.

You may not fit the criteria of the above lenders.

For Further information, or advice

Contact:
email: advice@pndales.co.uk
phone: 01636 642 844 or 0115 832 0265.

PNDALES LTD are authorised and regulated by the Financial services authority. You home may be at risk if you fail to keep up payments on any loan secured against it. PNDALES Ltd a typical fee for mortgage advice is £350, the precise amount will depend upon your circumstances

By admin Mortgages • Uncategorised • Updates 0 Comments

Mortgage Update – New capped rate

Market leading Capped Rate Mortgage Launched

In these uncertain times, most people don’t seem to know which type of the mortgage deal is the best to select.
With Bank of England interest rate so low most people assume that interest rates will, sooner or later increase. However, the issue with a fixed rate product is that if the rate does not increase or only increases a little and then remains static. If you had chosen a fixed rate there is a possibility that you may be paying above what you need to. This has its advantages, the security of knowing what your payment will be may be worth the extra in payments.
With a Bank of England tracker mortgage your mortgage increases or decreases with the ups and downs of the Bank of England interest rate. Therefore, if as outlined above people feel that interest rates will increase, then the payment on this style of mortgage will increase. However, if you don’t feel that interest rates are going to increase straight-away or increase only a little and then stall, then this method would appeal. The only problem with this is that what if your wrong and interest rates just go up and up.
So both basic types of Fixed or Tracker rate products have their limitations:
The Third Way!
A Capped Rate:
This is a mixture of both products, it is a tracker mortgage, but it can not go above a specified rate – the cap. So you benefit while interest rates are low, and if they increase a little you are still generally speaking better off than a fixed rate (at the moment) but if the Bank Rate increases above the Cap you are in-effect on a fixed rate, during that period, because if the Bank rate falls you would also fall again. In my view this is the best of both worlds.
Limitations: Caps sometimes have collars, this is when the interest rate charged can not go below a specified interest rate, recently it has become more common for Cap mortgages to have collars, you should always check the Key Facts document for full details on any Collars.
New Deal Launched.
3.99% tracker (Bank of England + 2.49%) until 30.06.12 Capped at 3.99% until 30.06.12
Maximum Loan to Value – 65%
Incentives – One Free Valuation
Remortgage Transfer Service included
Early repayment charges – only during the benefit period (4% to 30/06/12)
This is only one Capped product, it does not suggest that it is the best product for your needs, DALES can review your circumstances and make a recommendation suited to your needs. For Mortgages DALES offer an advice and recommendation service, and recommend products from the Whole of the Market.
For more details of this or other mortgage products or to arrange a free consultation please contact tel: 01636 642 844 or email advice@pndales.co.uk
Your Home is at risk if you fail to keep up payments on any mortgage or loan secured against it. P N Dales Ltd is Authorised and Regulated by the Financial Services Authority 496107.
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Beware the “free” valuation

We are all taught to be wary of people offering us a free lunch, and why would this not be the case with a mortgage and the valuation.

Currently there are a number of lenders who are trying to tempt us with a “free” valuation service. However, we should be careful, these free valuations are often only for the lender, in most cases you would not even receive a copy of the report.

What this means is that you have no comeback against the valuer or surveyor who did the work.

Traditionally, when you purchased a house the lender would make you obtain a valuation, you could always buy a basic valuation or upgrade to a full homebuyers report or a structural survey. The surveyor would view the property, check for damp, movement and any problems such as wiring issues etc. You could then decided whether you wanted to continue with the sale, may be you could negotiate with the vender, but at least if you did go ahead you knew or had some sense of surety that you knew what was wrong with the house, even if you picked the basic valuation.

If something was found to be wrong with the house that the valuation should have picked up, you would be able to take the surveyor to task.

Not so with a free valuation: the free valuation is not instructed on your behalf, they are instructed on behalf of the lender and as such you would have no come back at all.

All the lenders do offer an enhanced valuation package, that is those that offer a “free” valuation, and therefore it would be wise to select that option. However, these cost about the same as a standard valuation offered by other non free valuation lenders. What this really shows is that the lender who says “free” valuation, is not really offering a cheeper deal, because when you add in the cost of a real survey there is little difference in cost.

Another cheeky thing these same “free” valuation lenders, will do is add a little to their arrangement fees. They can get away with this if the valuation is free, and still appear cheeper than the non free valuation deals, but when you add back in the cost of a real survey you now notice that they are in fact more expensive.

All this said, we live in a world of cheapest is best, and not many people scratch the surface to look a little deeper, so its unlikely that free valuations will disappear and its even more unlikely that people will not be attracted to them.

Philip Dales

www.pndales.co.uk

Your home may be at risk if you fail to maintain repayments on any debt or mortgage secured against it.
PN Dales is authorized and regulated by the Financial services authority 496107.

For more advice on mortgages or other areas of your financial planing why not have a look at our web site www.pndales.co.uk or email advice@pndales.co.uk

PNDales Ltd
Northgate Business Centre
38 Northgate Newark
Nottingham
Tel: 01636 642 844
www.pndales.co.uk