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Property Investors Celebrate Removal Of Income Requirement From Buy-To-Let Mortgages

Property Investors Celebrate Removal Of Income Requirement From Buy-To-Let Mortgages

Buy-To-Let Mortgages On Offer
Based On Rental Income

There is good news for UK based property investors looking for a buy-to-let mortgage as lenders are beginning to understand how landlords make profit from property. Now one lender is taking the lead and offering buy-to-let mortgages based on rental income without worrying about a borrowers personal income.

Mortgage lender, BM Solutions, part of the Lloyds banking group, has removed their minimum £25,000 (GBP) income requirement from all of their buy-to-let mortgages.

Instead, the lender will make a buy-to-let mortgage offer based on the potential rental income expected to be generated by the rental property purchase, rather than being based on a borrower’s employed earnings.

The BM Solutions Buy-To-Let mortgage affordability calculation remains at 125% of the rental income, but the overall lending criteria have been tightened.

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New Help to Buy scheme may not be much use to first-time buyers as property prices continue to rise

New Help to Buy scheme may not be much use to first-time buyers as property prices continue to rise

Help to Buy scheme may boost

UK property prices
but may not be much use

to first time buyers

The controversial Government incentive scheme “Help to Buy” set for launch on 1st January 2014 is designed to aid first time buyers with property purchases and in turn this incentive could boost the UK residential property sales market without being of any real use to first-time buyers.

Morgan Stanley have issued a forecast that UK residential property prices are expected to increase between 8% and 13% before the end of 2014 and the bank reckons that its forecast is “supported by government policy”.

The investment bank’s prediction follows a warning by the Organisation for Economic Co-operation and Development (OECD) which says that the Help to Buy scheme offering 95% mortgages, due to launch in January 2014, could pump up UK residential property prices but would not necessarily increase the supply of available residential property.

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A CHEAP mortgage bonanza could revive the housing market as lenders roll out exceptional deals.

Cheaper Mortgages On Way For UK

Cheaper Mortgages On Way For UK

The number of record-low mortgages have boomed since Christmas 2012, with several major  lenders launching fixed-rate products with an interest rate below two per cent.

Aaron Strutt, mortgage broker at Trinity Financial, said: “It’s been a great start to 2013 with lenders launching fantastically cheap rates. Many are once-in-a-lifetime deals.”

HSBC is the latest major lender to launch a fixed-rate deal below two per cent.

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Confidence in the UK’s commercial property sector has fallen for the first time in almost a year amid fears about the economic fallout of the Eurozone crisis.

According to survey data released last Friday by Lloyds Banking Group, the UK’s largest commercial lender, confidence in the prospects of the industry are being pushed lower by fund managers, only 10% of whom expect activity to increase within the next six months.

Large businesses were more positive, however, with more than two-thirds intending to increase their exposure to the sector.

Lloyds is well placed to gauge industry sentiment, having inherited a large loan book from its takeover of HBOS.

The group owns more than £60 Billion (GBP) or $93 Billion (USD) of commercial property loans.

Lloyds’ Managing Director of Corporate Real Estate, Lynda Shillaw said: “This quarter’s market overview suggests that weakening prospects for the world economy, turbulence in global financial markets and Europe’s sovereign debt crisis are impacting negatively on UK commercial property confidence.”

Added to the news that UK retail surveyors are reporting an increase in vacant retail units and the picture becomes even gloomier for landlords with commercial premises on the British high street.

According to the Royal Institute of Chartered Surveyors, (RICS), the number of retail surveyors who saw an increase in available shop space rose 14% during the three months to September,

The 29% net balance of those seeing a rise in availability, up from 15% in the last quarter, is a worrying omen for the retail property sector, which is suffering from falling consumer confidence as well as a massive tightening in lending from UK banks.

The number of respondents reporting increased demand for shop space fell, with the net balance declining from 12% in the second quarter to -19% during the three months to October.

Simon Rubinsohn, RICS chief economist said; “There is a suspicion that the recovery that was expected is no longer coming, and with more stock coming through and demand falling, rents are going to come under pressure. The resolution of the sovereign debt crisis in Europe would go some way to alleviating the concerns, but confidence is crucial to the retail sector and at the moment it is hard to see where the good news story is coming from”.

Across the wider commercial property sector, demand levels slipped back for the first time since last year, with a net balance of surveyors seeing demand among tenants falling to -11% from a 10 % positive balance during the last quarter.

Landlords across the sector also offered special deals and discounts to encourage retail tenants to take up commercial property rental agreements.

Over the last three months, 20% of commercial landlords said the need for inducements had been increasing and many felt that landlords were under increasing pressure to incorporate more flexibility into their leases.

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Property investors and home buyers now face bowing down to their lender’s choice of conveyance solicitor or even having to pay twice to use their own solicitor

As if finding the property, saving a deposit, passing credit and salary checks weren’t enough for would-be property buyers!

Lenders have thrown up yet another new issue – YOUR SOLICITOR!

An increasing number of borrowers are finding that their lender will not work with the law firm they have chosen to do their conveyancing.

This problem is likely to grow, causing a situation that reduces consumer choice and increases costs, hassle and delay to the buying process.

Mortgage lenders have always had panels of law firms they are willing to work with, but in the past few months big names such as Santander, Nationwide and Lloyds Banking Group have all reviewed and reduced those lists – in some cases removing solicitors who have worked with them for more than 20 years.

Lenders blame a rise in fraud as the reason for the cull – criteria have been tightened and a smaller panel should be easier to keep an eye on. No lender will say how many solicitors have been dropped, claiming the information is commercially sensitive, but the Law Society says it is hearing daily from firms that have been removed from panels, or have other concerns about them. Some do not even realise they have been dropped until contacted by a borrower who has instructed them.

Borrowers may only find out their solicitor is not approved when they apply for a mortgage – by which point those who are selling as well as buying are likely to have instructed someone and incurred costs.

For those who are only buying, switching may not mean a fee, but it could mean using someone unknown rather than a solicitor you have used before or have had recommended.

The Council of Mortgage Lenders, (CML), is unapologetic, saying mortgage companies have been forced to act. “There has been a significant amount of fraud and loss to lenders and their clients out of conveyancing in recent years, the Law Society’s recent creation of a conveyancing quality scheme is a tacit admission of this fact”. says the CML’s Sue Anderson

While the Law Society argues that lenders can be assured that members of its new scheme meet strict standards, Anderson describes it as “untried, unproved, untested” and says “it is reasonable for lenders to take their own steps to control their risk”.

Unfortunately for borrowers who want to choose their own lawyers, the issue looks likely to rumble on. Some lenders say their lists are closed, so those firms that have been dropped through lack of business will not be able to get back on, and the chair of the Conveyancing Association, Edward Goldsmith, says he expects panels to go on shrinking. “In two or three years those panels will be further reduced – they will be almost like super-panels,” he says. He suggests that, ultimately, this will be good news for consumers. “The firms that remain on the panel will be those who do a good job.”

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