Friday, October 10, 2008
Base rate tracker buy to let mortgages by Letting Focus.
Well it has been quite a week hasn’t it?
There have been some good things - some coordinated government intervention in the banks, a review of bank executives’ pay (much to Digby Jones’s dismay) and at last, some of the top guys at a bank that caused the mess look set to get their marching orders. Bye bye Mr. Fred Goodwin of RBS.
The 0.5 per cent cut in interest rates is also great news for me, many other landlords and anyone with any mortgage tied to the BOE base rate. It goes a tiny way to making up for huge losses suffered on the casino otherwise known as the stock market.
GET A BANK OF ENGLAND BASE RATE TRACKER
I have always been a fan of Bank of England base rate trackers – in fact all my mortgages are on BOE base rate trackers- and I have long advised that people should steer clear of anything that tracks anything that their lender can change at a moments notice, such as the lenders’ standard variable rate.
I’m lucky enough to have had the foresight to have gone one better and taken out some lifetime buy to let mortgage trackers at 0.69% and 0.89% above BOE base rate, which now looks like great business. I just wish I had done the same for the whole of my portfolio of mortgages, as the majority of my buy to let mortgage loans will need to be remortgaged in mid 2009.
So, my advice is if you are on a mortgage which has just gone down as a result of the 0.5 per cent cut in the base rate, use the money wisely and think about stashing away the savings you will get as a result of the cut in base rates, especially if any of your loans have to be remortgaged next year.
If you have loans reaching the end of their discount period and coming up for remortgage, you will need access to lots of extra cash to meet the very high arrangement fees for the current crop of mortgages now on offer - that's if there are any deals worth going for. If not, you may as well stay on your mortgage companies default mortgage rate as it may be better than the new stuff on offer.
These high arrangement fees, which are typically anywhere from 1.5 to 3 per cent, will be around for as long as the crunch is with us - which could be for another 2 or 3 years.
LONDON HOUSE PRICES FALLING
On a bright note, finally, at last here in London, I am seeing vendors starting to drop asking prices on property.
As you may know from my seminars and public speaking events, I have not bought in the capital for 5 years because I have long thought that prices are way too high here even when one is buying “Below Market Value,”whatever market value is!
Well, at last some sense is starting to appear and I’m seeing some real markdowns in house prices. See our article on Why the credit crunch makes it easier to buy property below market value for more on this,
However, I fully expect house prices to fall for at least another 9 months as the effects of the credit crunch start to roll over into what’s called the “real economy” – which means anything and anyone outside the hallowed halls of the pin stripe and braces brigade in the city.
CHOOSE TENANTS WITH CARE
Also, in this difficult economic environment, you’ll need to pick your tenants with extra care. So, make sure you or your agent reference checks tenants even more carefully than before.
And if you have a choice, pick people who look well placed to stay in their jobs or who are bright enough to get another one if the axe falls on their current employment.
And treat good existing tenants well. If tenants are paying the rent it should go without saying that they should be treated fairly and with respect.
And if they cannot pay the rent, don’t be dumb and make them stay the course until the end of any fixed term of a tenancy agreement. If they are struggling to pay, this will not do them or you any good at all. So, cut your losses and let them leave early.
CHECK YOUR CREDIT SCORE
And if you have not already done, so you should check your credit record and credit file and make sure what information the agencies hold on you is correct.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property investment experts.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let. The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property with no money down.
I’m an expert freelance property journalist, property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property investment training & advice
In my work as a consultant I help private individuals with any aspect of property investing or buy to let. What’s unique about lettingfocus.com is that we are independent property mentors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corportate consulting role, I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week. WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
Go to the bottom of this post, and click on “Link to this post”
Our home blog page should then open & you should then see my smiling profile. Then page all the way down and on the bottom right it will say “Site feed” - click there and away you go.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included including also the links in the section “ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON” Please contact us via the Contact US button at our main site http://www.lettingfocus.com/ if you have any queries about this.
There have been some good things - some coordinated government intervention in the banks, a review of bank executives’ pay (much to Digby Jones’s dismay) and at last, some of the top guys at a bank that caused the mess look set to get their marching orders. Bye bye Mr. Fred Goodwin of RBS.
The 0.5 per cent cut in interest rates is also great news for me, many other landlords and anyone with any mortgage tied to the BOE base rate. It goes a tiny way to making up for huge losses suffered on the casino otherwise known as the stock market.
GET A BANK OF ENGLAND BASE RATE TRACKER
I have always been a fan of Bank of England base rate trackers – in fact all my mortgages are on BOE base rate trackers- and I have long advised that people should steer clear of anything that tracks anything that their lender can change at a moments notice, such as the lenders’ standard variable rate.
I’m lucky enough to have had the foresight to have gone one better and taken out some lifetime buy to let mortgage trackers at 0.69% and 0.89% above BOE base rate, which now looks like great business. I just wish I had done the same for the whole of my portfolio of mortgages, as the majority of my buy to let mortgage loans will need to be remortgaged in mid 2009.
So, my advice is if you are on a mortgage which has just gone down as a result of the 0.5 per cent cut in the base rate, use the money wisely and think about stashing away the savings you will get as a result of the cut in base rates, especially if any of your loans have to be remortgaged next year.
If you have loans reaching the end of their discount period and coming up for remortgage, you will need access to lots of extra cash to meet the very high arrangement fees for the current crop of mortgages now on offer - that's if there are any deals worth going for. If not, you may as well stay on your mortgage companies default mortgage rate as it may be better than the new stuff on offer.
These high arrangement fees, which are typically anywhere from 1.5 to 3 per cent, will be around for as long as the crunch is with us - which could be for another 2 or 3 years.
LONDON HOUSE PRICES FALLING
On a bright note, finally, at last here in London, I am seeing vendors starting to drop asking prices on property.
As you may know from my seminars and public speaking events, I have not bought in the capital for 5 years because I have long thought that prices are way too high here even when one is buying “Below Market Value,”whatever market value is!
Well, at last some sense is starting to appear and I’m seeing some real markdowns in house prices. See our article on Why the credit crunch makes it easier to buy property below market value for more on this,
However, I fully expect house prices to fall for at least another 9 months as the effects of the credit crunch start to roll over into what’s called the “real economy” – which means anything and anyone outside the hallowed halls of the pin stripe and braces brigade in the city.
CHOOSE TENANTS WITH CARE
Also, in this difficult economic environment, you’ll need to pick your tenants with extra care. So, make sure you or your agent reference checks tenants even more carefully than before.
And if you have a choice, pick people who look well placed to stay in their jobs or who are bright enough to get another one if the axe falls on their current employment.
And treat good existing tenants well. If tenants are paying the rent it should go without saying that they should be treated fairly and with respect.
And if they cannot pay the rent, don’t be dumb and make them stay the course until the end of any fixed term of a tenancy agreement. If they are struggling to pay, this will not do them or you any good at all. So, cut your losses and let them leave early.
CHECK YOUR CREDIT SCORE
And if you have not already done, so you should check your credit record and credit file and make sure what information the agencies hold on you is correct.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property investment experts.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let. The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property with no money down.
I’m an expert freelance property journalist, property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property investment training & advice
In my work as a consultant I help private individuals with any aspect of property investing or buy to let. What’s unique about lettingfocus.com is that we are independent property mentors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corportate consulting role, I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week. WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
Go to the bottom of this post, and click on “Link to this post”
Our home blog page should then open & you should then see my smiling profile. Then page all the way down and on the bottom right it will say “Site feed” - click there and away you go.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included including also the links in the section “ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON” Please contact us via the Contact US button at our main site http://www.lettingfocus.com/ if you have any queries about this.
Labels: buy to let mortgage, choosing tenants, credit file, credit score, London house prices, tracker mortgages
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