Mortgage News
Yes, we are all worried this isn’t here to spread more doom and gloom. This is just to spread awareness of what’s out there. What can be done and what we can be doing right now.
Landlords:
For years most landlords were leveraging their position and doing BTL’s at 75%, 80% and even 85% LTV. Now, when interest rate was low this was fine. There will be a lot of landlords with properties in their own name or in a ltd co that did this and locked their rates in 2 or 5 years ago on marketing leading rates.
So things to consider:
1) DSCR – Debt Service Coverage Ratio, this is essentially the amount of rent you need to receive to cover your mortgage payments. This can be as little as 125% or 145% of the payment. An example of this is if your new mortgage payment is ￡312.50 based on 5% interest rate on a ￡75,000 loan. You rent will now have to be ￡390.62 -> ￡453.12.
2) How long do we fix for? We are seeing a growing trend that 2yr fixed rates are more expensive than 5yr fixed rates. We cant advise you how long to fix for based on what interest rates are doing. WE don’t have a crystal ball, so we don’t know what’s will happen with rates in 2, 3, 5, 7 or 10 years. However, what do you want? Are you planning on selling the property? Do you want stability for 5 years or longer? Would you like the ability to just fix for 12 months and see what the markets doing and decide whether you want to fix again, or dispose of your properties?
3) If my deal expiring within the next 6 months? Can I look to fix the mortgage now with a new lender, or do a product transfer with my existing lender to save money?
4) Is now the time to look at incorporating the portfolio to save some money on tax to offset additional interest rate costs.
Homeowners
We have not seen interest rates increase at such an alarming rate since pre 2007 financial crash. In early 2022, homeowners could benefit from interest rates starting with a 1. As of today (22/09/22) fixed interest rates start with a 3.
Yes, we will of al heard the stories in the past about when inflation and interest rates were in double digits. However, what is not considered is at that time the average house price. In February 1990, was ￡58,250.00 today the average house price is over ￡250,000.
So what can we do today:
1) Review those rates, if you are on a lenders SVR (Standard Variable Rate) or within 6 months of the end of your fixed rate expiring. Let's review it, it may be prudent to move lenders for a better rate. However, it could be just as prudent to stay with your current lender and do a product transfer.
2) We could look to extend the term. This is not ideal, but it could help you with budgeting needs. You also have the ability with most UK mortgages to overpay by 10% per annum without incurring early repayment charges. So, you can extend your mortgage term to help your budget but then overpay when you can to reduce the term.
领英推荐
3) Debt consolidation: It is far from ideal adding those personal loans and credit card on to your mortgage. However, if you are paying minimum payment on them pesky credit cards it could take you over 20 years to pay them off. So why not save some money. Add them to your mortgage and use the savings you are making to overpay on your mortgage to reduce the loan.
The above are just some handy tips to help guid you through these tough times! Remember, we are here, and the phones are available if you want some guidance.
Also, if you want to check your credit file, I find this one best.
Check My File:
As it’s the only multi agency report giving you data from Experian, Equifax & TransUnion.
0191 486 2089 - Call Me
[email protected] - Email Me
advancedfunding.co.uk - Visit Us
https://lnkd.in/dEFhUyw - WhatsApp Us
https://lnkd.in/dBzPgB4 - Book an appointment with Me
#mortgages #buytolet #finance #landlord #investment #property #portfolio #tax #financial #properties #StampDuty #business #funding #economy #rental #loans #income #HMO #MUFB #development #refurbishment #extension #SelfBuild
Your property may be repossessed if you do not keep up repayments on your mortgage