5 reasons why buy to let is back
Posted on 17 November 2014
With 14% of remortgages taking place in the buy to let sector, if you have not yet invested in a property to let, the chance is that one of your neighbours already has.
As the by-product of the mortgage market, the buy to let market was born in 1996 following an increasing demand for non-residential type of mortgages due to economic, social and demographic factors of our changing society. If the buy to let market was a person, it would have been born in the year prior to an unprecedented growth in the housing marketand grown through the exciting times of the internet revolution. Still a teenager during the recession, it would have managed to survive and graduate with flying colours.
However - the investment mortgage market was deeply affected during the economic downturn with business volumes slashed by a third on purchases in 2009 – the year following the year of the Global Financial Crisis.
With the mortgage market in tatters, all efforts were concentrated into jump starting sales of residential purchases for first time buyers and home movers alike and the government had generously invested in creating home buyers schemes to resuscitate the market and infuse new blood, which is vital for the healthy functioning of traditional banking systems.
But it seems that, 18 years since its birth, buy to let is back with a vengeance -
Here’s 5 reasons why we feel it’s a great time to consider investing in property:
1. Lenders are competing for the buy to let business. According to a recent survey by Mortgages for Businesses, on average, fees and charges on buy to let mortgages are so far getting cheaper quarter on quarter with charges for low loan to value (LTV) deals fallen dramatically.
2. Because Mark Twain was right and it’s not a good idea to put your eggs in one basket.
3. It is an alternative pension plan – having an asset which produces regular income while tenanted is what every investment manager dreams about. Just remember - interest only is not the answer if you are investing to keep.
4. Investing for growth – if you believe you have found the next Shoreditch or Hackney – it could pay very well. Always ask yourself – what if?
5. Because you might want to help your children and purchase a property now, let it and then one day pass it onto your estate.
John Charcol best buys tables are showing rates start from 1.99% for low loan to value mortgages with long term fixed rates at 3.45% - such low rates for buy to let mortgages are unusual.
Speak to our team and find out if buy to let might be an option for you.
0844 346 3672
This article is for information only and does not constitute advice. Please obtain professional advice before taking out a mortgage. Your property may be repossessed if you do not keep up repayments on your mortgage, or any debt secured on it.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.