Higher Mortgage Loan To Value Ratios Are Coming on Buy to Let and Expect More Rejection for The Riskier Property Deals
One of the results of the credit crunch is that the mortgage lenders are getting more choosy about the type of property they will lend money on.
On Saturday the FT carried a story that said it was thought that Northern Rock had pulled out of some agreed mortgage offers on high rise flats, though NR claimed it hadn’t.
Basically, the banks are now dead scared to lend where they are concerned a property might be hard to sell on should it become repossessed – the risk of that has, of course, increased along with the rise in central bank base and more recent rises in inter bank lending rates.
Indeed, last week Victoria Mortgages, went into administration. They had a lot of what might be called non-standard properties. Other lenders are scared of going the same way.
Wary Lenders
As I said in previous blogs, lenders are also more wary of lending to people with poor credit records and anyone with a chequered income history may also find it harder - that will include the self-employed, people reliant on bonus payments or even landlords who are overly dependent on a rent roll.
Also, I cannot now see mortgage lenders being very keen to lend to novice property investors (those with no experience of being landlords) to buy property with “no money down” on the back of closed bridge loans or to buy new build flats against a developer’s supposed “discount”
Borowers will have to expect more scrutiny of their deals and be prepared to face outright rejection.
Unless, that is, the borrower is prepared to pay a much higher interest rate.
Perhaps we may now actually see the end of the rather daft “Become a property Millionaire in 6 Months” nonsense ads.
Yes folks, this is the era where sensible lending will be back. In fact, I expect lenders on buy to let to revert to a maximum 75% loan to value rate for all but the most experienced portfolio landlords.
ABOUT LETTINGFOCUS
I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years. I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased advice and seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider and as such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price.
I can also explain how to reduce the risk of getting a bad tenant.
I can tell you how to avoid the many scam artists that plague property advice.
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
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Copyright: David Lawrenson 2007. This blog is updated at least twice a week
On Saturday the FT carried a story that said it was thought that Northern Rock had pulled out of some agreed mortgage offers on high rise flats, though NR claimed it hadn’t.
Basically, the banks are now dead scared to lend where they are concerned a property might be hard to sell on should it become repossessed – the risk of that has, of course, increased along with the rise in central bank base and more recent rises in inter bank lending rates.
Indeed, last week Victoria Mortgages, went into administration. They had a lot of what might be called non-standard properties. Other lenders are scared of going the same way.
Wary Lenders
As I said in previous blogs, lenders are also more wary of lending to people with poor credit records and anyone with a chequered income history may also find it harder - that will include the self-employed, people reliant on bonus payments or even landlords who are overly dependent on a rent roll.
Also, I cannot now see mortgage lenders being very keen to lend to novice property investors (those with no experience of being landlords) to buy property with “no money down” on the back of closed bridge loans or to buy new build flats against a developer’s supposed “discount”
Borowers will have to expect more scrutiny of their deals and be prepared to face outright rejection.
Unless, that is, the borrower is prepared to pay a much higher interest rate.
Perhaps we may now actually see the end of the rather daft “Become a property Millionaire in 6 Months” nonsense ads.
Yes folks, this is the era where sensible lending will be back. In fact, I expect lenders on buy to let to revert to a maximum 75% loan to value rate for all but the most experienced portfolio landlords.
ABOUT LETTINGFOCUS
I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years. I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased advice and seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider and as such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price.
I can also explain how to reduce the risk of getting a bad tenant.
I can tell you how to avoid the many scam artists that plague property advice.
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries you will find a button which says “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
If you have a website & are thinking of reproducing material here, that’s fine but we DO require a link to the blog to be included, including also all the links in this section. (The full article including all links must be available to ALL VIEWERS of your site and not restricted.)
TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment to this post, simply click on “link to this post” to add your comment and to view comments of other people.
Copyright: David Lawrenson 2007. This blog is updated at least twice a week
Labels: buy to let, buy to let mortgage lending, buy to let mortgage rates, buy to let mortgages
This entry was posted by lettingfocus, on
Thursday, September 20, 2007.
