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Buy-To-Let Mortgage Lenders Reducing Rates As Demand Soars

Buy-To-Let Mortgage Lenders Reducing Rates As Demand Soars

Buy-To-Let Mortgages Improving To Meet Increased Demand

UK mortgage lenders are offering more Buy-To-Let mortgages, with better rates on smaller deposits, in response to soaring demand from property investors and portfolio landlords over the past year.

Buy-To-Let mortgage lending increased by 18.6% in 2013 compared to 2012, according to the latest figures from the Council of Mortgage Lenders (CML).

The last quarter of 2013 also saw Buy-To-Let mortgage lending finish strongly, despite a predictable seasonal dip in December, with lending up 20% against the same period of 2012.

Demand for Buy-To-Let mortgage loans is picking up as landlords in the UK seek to expand their rental property portfolios, with over 30% aiming to buy more properties in the next 12 months and more than 80% of UK private rental sector (PRS) landlords are making a full-time living from their lettings activity according to the latest BM Solutions/BDRC Continental Landlord Panel.

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Surge In New Buy-To-Let Mortgage Products Confirms Rental Property Revolution

Surge In New Buy-To-Let Mortgage Products Confirms Rental Property Revolution

Surge In New Buy-To-Let Mortgage Products Confirms
Rental Property Revolution

A number of market leading lenders have introduced improved Buy-To-Let mortgage products to meet the growing demand for portfolio expansion by UK landlords.

The surge in the number of new mortgage products coming to market confirms that the UK buy-to-let industry is growing across the whole of the UK and there are even more BTL products still awaiting launch dates from lenders.

Paragon Mortgages has introduced a new Buy-To-Let mortgage product for single unit properties, Houses of Multiple Occupation (HMO’s) and multi-unit blocks; the rate is fixed at an initial 5.49% for a maximum Loan-To-Value (LTV) of 75% with a 2% product fee.

The Post Office, (and its financial services partner the Bank of Ireland) have also entered the Buy-To-Let mortgage market, launching a range of buy-to-let mortgages at 60% and 75% LTV – some of their BTL mortgage products don’t even have an arrangement fee and include free valuation.  

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New EU Rules Will Cause Mortgage Rate Confusion

New EU Rules Will Cause Mortgage Rate Confusion

European Ruling Set To Make Mortgage Rates Harder To Understand

New European rules could make mortgage rates even harder for customers to understand as Euro bureaucrats want to introduce a new way of calculating interest rates on residential property mortgage loans and experts are warning that this could be a recipe for confusion.

Under the new proposed EU directive, mortgage lenders would be expected to tell borrowers the maximum interest rate they have charged over the past 20 years, and display this figure on all of their literature.

However, industry experts say customers are already confused by the rates that lenders are forced to display, and that this will make it even harder for them to understand mortgage rates.

David Hollingworth from mortgage broker, London & Country, said:”I think that there is a chance that borrowers become overloaded with information and APR rates that mean little to them, and so risk them being ignored altogether, the extra information could lead to more customers failing to shop around and remaining on expensive standard variable rates (SVRs).

The EU credit directive concerning the mortgage change is expected to be approved later this year. It will compel lenders to display a new annual percentage rate (APR) on all of their literature. This will be calculated using the highest level that the lender’s SVR has reached in the previous 20 years.

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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

There are always a number of property related studies, research and data gathering exercises going on within the UK property industry and the latest research carried out by Online bank – First Direct, (a division of HSBC bank and member of the HSBC Group), has shown that some adults in the UK regret the fact that they have not yet purchased property.

The study revealed 12% of those questioned in 2011 believe they have been living in their rented property for too long.

The same proportion of individuals stated they should have attempted to purchase a property of their own during the last 12 months, while just 4% of respondents said they wished they had not bought a residential dwelling in this time.

Bruno Genovese, Head of savings at the organisation noted January can be a great time for people to start getting their money matters in order for the coming year. “The earlier people start to plan their finances and look to the future, the better their long term financial position will be.”

However you look at the data it seems clear that the largest barrier to many people wishing to purchase property is that of available finance. First Time Buyers (FTBs) need a substantial deposit to be able to afford the purchase of a home and property investors are becoming increasingly limited in their options for finance as the banks are still edgy about lending and continue to limit the number of mortgage products property investors can have at any one time.

Savvy and educated property investors who have already negotiated a BMV purchase may have structured their property purchase by borrowing the necessary funds from a Bridging Finance specialist.

If you are looking for Bridging Finance to enable a property purchase or would like to find a mortgage broker then please follow the links

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