The Future of Buy-to-Let Lending
It’s difficult to tell whether the Euro crisis has reached a stage where everything has calmed sufficiently to allow headline writers a period of rest, or it’s got to the stage where the intricacies of the package required to save the currency have become so complex they’re just not worth publishing, but either way, we have reached something of a financial plateau in the UK. Indicators aren’t improving, but with Christmas well on the way, things aren’t necessarily getting worse. However, this leaves banks still stuck in the middle, reluctant to lend to a customer base who are eager to make the most of low interest rates. What is the future for buy-to-let lending, and is it promising for landlords?
High Deposit, Low Risk
We’re unlikely to ever see the 100% mortgages we used to see before the crisis and landlords are going to need to stump up higher and higher deposits if they’re looking to expand their portfolio. That means that returns need to be turned into cash quickly, rather than just accumulating as capital and this could definitely slow down growth opportunities for serious landlords.
A Good Credit Record
Buy-to-let landlords wanting to borrow from banks are under serious scrutiny when it comes to their credit record, and only landlords with a positive history are being considered. Now is the time to get any blemishes on your record cleared up and to take out that property insurance policy you’ve been thinking about. Don’t let a tenant’s missed payment jeopardise your credit history.
The Price Is Right
Banks are becoming far more canny about the way in which they price loans, and with the base rate at just 0.5%, banks are having to look for long term returns. Beware about that introductory rate and make sure that when a good rate expires you look to switch: just a few months on the wrong mortgage and you could end up spending thousands more than you should have done.
There are certainly changes afoot for the banking sector and they will have a direct impact on what you can borrow as a landlord. It’s certainly worth thinking about expanding at the moment as interest rates can only go up, but keep an eye on the news and make sure whatever the changes, you know about them!