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Mortgage Company May Cost You says Letting Focus

I read in the Daily Telegraph, 3 great quotes from Warren Buffet, the “Sage of Omaha” and one of the world’s most brilliant stock market investors.
He was talking about stock market investments, but his comments could equally apply to buy to let – and the way that many novice investors have bought the wrong kind of property, egged on by property companies / agents masquerading as property experts.
Here are the quotes:
On investing generally - “Never invest in something you don’t understand” and “Seek only to be fearful when others are brave and brave when others are fearful” (I kept that quote in mind when I bought Barclays stock last week!)
On the credit crunch – “You only find out who was swimming naked when the tide goes out”
Great stuff isn’t it.

Mortgage Lenders
Of course, readers of this column will already know my opinions of those robbers – the mortgage lenders.
On this subject, I see mortgage lenders are now cashing in again. David Whittaker of Mortgages for Business was quoted by the Residential Landlords Association.
He pointed out that nervous investors were buying short-term fixed-rate mortgages that may be inappropriate.
This is because whilst many buy-to-let lenders are offering extremely competitive headline rates, they are gaining their margin through massive arrangement fees of up to 3% that can be added to the mortgage - and hence repayments.

Most Competitive Mortgage Deals
Of course, those with savvy will know that finding the most competitive mortgage means looking at the fees as well as the mortgage headline rate so you can see whether it is a good deal overall.
As a long term finance strategy for those holding on to property short term fixes are rarely appropriate.
Surely, the only reason for brokers and lenders offering these mortgage deals to buy-to-let investors is the potential re-mortgage business in 12 months’ time -i.e. another chance to get more commission for the broker and another juicy “arrangement fee” for the lender.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
LettingFocus provides independent unbiased seminars for property investors and 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.
I can advise where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to eliminate the risk of getting a bad tenant and more. I have been a landlord and property investor myself for over 25 years.

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Related Article: Have you seen this article on unfair mortgage fees?: http://www.lettingfocus.com/pages/myarticles_Unfairmortgage.html

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