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Pension Freedom Fuels Increase In UK Property InvestmentPension Freedom Fuels Increase
In UK Property Investment

Since UK pensioners were granted full control of their retirement savings in April 2015, an estimated 60,000 (70%) pensioners have taken advantage of their ability to take some or all of their accumulated pension in a lump sum, with many opting to put their cash into property instead as an alternative to annuities, shares and bonds.

According to the latest Global Real Estate Outlook report published by property investment company IP Global, property remains a far more predictable and stable longer term option compared to alternative investments in the stock market.

In the UK, property prices in London and Manchester are leading the way, with prices in Greater London increasing by 12% in the last year alone.

New properties in Manchester may appear to be valued at less than half the average of London properties, however, residential property prices are expected to continue rising to close this gap, with new projections putting Manchester’s property price growth at a staggering 26.4% by 2019.

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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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Buy-To-Let Mortgage Fees Increase 70% in 4 Years

Buy-To-Let Mortgage Fees Increase 70% in 4 Years

Since end of the UK property market boom in 2007/8, property investors have seen a dramatic fall in the number of mortgage products available to them, (from over 300 BTL mortgage products in 2007 to less than 100 available in 2012).

To make matters worse Buy-To-Let (BTL) mortgage fees have increased more than 70% in the same timeframe, making a typical investment mortgage arrangement now cost approximately £1,500 (GBP).

Moneyfacts, the financial information provider, claim that the average BTL mortgage fee was £899 (GBP) before the Bank of England base rate fell to 0.5% more than 3 years ago. The average Buy-To-Let mortgage fee is now around £1,514 (GBP), almost double what it was at the height of the UK property boom and with less than a third of the market choice of products.

Sylvia Waycot, spokesperson for Moneyfacts, said “There is no logical reason for the increase in fees charged. Mortgage administration costs cannot have jumped 70%. Credit searches are no more complex than in previous years, so why are fees so high? It could be that lenders are keen to push fees because they are an upfront cost, which means they get the money at the start regardless of fulfilling the full length of a fixed term. And should you not fulfil the full length of the fixed term that can open the door to a whole host of other upfront charges.”

The average arrangement fee on a two-year fixed rate Buy-To-Let mortgage is now around £1,500 (GBP) with a five-year fixed rate mortgage around £1000, if investors are going to put down a deposit of 25% they may secure a rate better than 4.49%.

For a list of Buy-To-Let Mortgage providers click here

The UK mortgage market is warning potential borrowers that there has been a sudden surge in the number of mortgage providers lowering how much they will lend for an interest-only mortgage deal.

Nationwide, Santander, and Coventry Building Society are among the mainstream mortgage lenders that have reduced their Loan-To-Value (LTV) ratios on their interest-only mortgages to just 50%.

The announcement comes as little surprise to seasoned property professional who have seen the pattern repeatedly. The reduced LTV values will immediately affect new borrowers, however, changes will come into effect if homeowners need to borrow additional money against the value of their property to fund home improvements, as they will be treated as new loans and the amount will be limited to approximately 50% of the property value

Moneyfacts spokesperson, Sylvia Waycot, said “The development applies to new borrowers only, so anyone with existing interest-only deals at higher LTVs need not worry. However, the end result is that many people who chose an interest-only mortgage because it was cheap, are at their maximum monthly outgoings and will find themselves unable to move should they need to, or borrow for improvements – which means they are in fact under a form of house arrest.”

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