It shouldn't have to be said that the mortgage market is going through a state of flux at the moment and yes that is an understatement. The mortgage market over the last 6 months has turned from a well oiled machine to what can only be described as a farm yard tractor left out in the field for 10 years left to just seize up.
As a result of this tightening of the credit markets, lenders have decided what type of business they want and more importantly what type of business they don't want. As a result, self certification is all but a Dodo and extinct, a high loan to value mortgage is considered 80%. On that note if you say 100% mortgage to anyone in the industry they will say wow I remember those didn't they come with flared trousers and some very dubious music ha-ha. But seriously the main business area that has suffered and suffered in a big way is Buy to Lets.
The area of buy to let has undoubtedly been one of the driving forces in pushing the housing market to its peak in recent years. Nevertheless, it has proven to be detrimental to both the economy and Joe Public. The reason why I say Joe Public is because it has been ordinary folk who have bought buy to lets in an effort to make an extra income, which may be the root of the problem.
I remember back in the very early 80s car auctions were the main preserve of the motor trade. Ordinary people did not go to car auctions and when they did they looked like ducks out of water. However during this time it became fashionable for a lot of ordinary folk to go and try and pick up a bit of a bargain and polish it and sell it on for a small profit. So we had milkmen, firemen, postmen and just about anyone getting in on the game.
But all that happened is these people with their limited experience just got caught up in the moment and paid too much for the wrong cars and on a lot of occasions got stung. The reason I am telling this story is the exact same thing happened with buy to lets. Even though the sums of money are far greater than a couple of grand for a car the process was the same, inexperienced people playing in a market they knew nothing about. A lot of people paid too much for their properties. In some cases people with no experience were buying houses they hadn't even seen.
I have been buying property for over ten years professionally and I don't mean I bought my own home. I have bought quite a few buy to lets. Even with all this experience I would never buy any property without seeing it and I do not know any other professional landlord who would. So why oh why do ordinary people think they can step into this market and treat it with what can only be described as reckless neglect.
Unfortunately what has happened is as the saying goes; they have ruined it for the rest of us. The irresponsible borrowing and buying has put the lenders at risk as they are finding themselves flooded with customers who can't repay their loans, and as such, the lenders now don't want to lend to anyone. Loan to value for buy to lets has dropped recently from 85% to 75% and it is estimated that with falling property prices, this will drop even further.
All this leaves an industry in great turmoil with very little prospect of recovery. What I suggest is, I would like to see forward thinking lenders come out with a professional buy to let product for landlords that have over ten properties. These landlords have already demonstrated they can fund purchases up to now and it would mean that they could get into a market that is quite beneficial for buyers in general. In addition this type of lending would have the result of producing some buyers in the market place which would at least keep the housing market moving at a trickle which is more than it is moving at the moment. - 16928
As a result of this tightening of the credit markets, lenders have decided what type of business they want and more importantly what type of business they don't want. As a result, self certification is all but a Dodo and extinct, a high loan to value mortgage is considered 80%. On that note if you say 100% mortgage to anyone in the industry they will say wow I remember those didn't they come with flared trousers and some very dubious music ha-ha. But seriously the main business area that has suffered and suffered in a big way is Buy to Lets.
The area of buy to let has undoubtedly been one of the driving forces in pushing the housing market to its peak in recent years. Nevertheless, it has proven to be detrimental to both the economy and Joe Public. The reason why I say Joe Public is because it has been ordinary folk who have bought buy to lets in an effort to make an extra income, which may be the root of the problem.
I remember back in the very early 80s car auctions were the main preserve of the motor trade. Ordinary people did not go to car auctions and when they did they looked like ducks out of water. However during this time it became fashionable for a lot of ordinary folk to go and try and pick up a bit of a bargain and polish it and sell it on for a small profit. So we had milkmen, firemen, postmen and just about anyone getting in on the game.
But all that happened is these people with their limited experience just got caught up in the moment and paid too much for the wrong cars and on a lot of occasions got stung. The reason I am telling this story is the exact same thing happened with buy to lets. Even though the sums of money are far greater than a couple of grand for a car the process was the same, inexperienced people playing in a market they knew nothing about. A lot of people paid too much for their properties. In some cases people with no experience were buying houses they hadn't even seen.
I have been buying property for over ten years professionally and I don't mean I bought my own home. I have bought quite a few buy to lets. Even with all this experience I would never buy any property without seeing it and I do not know any other professional landlord who would. So why oh why do ordinary people think they can step into this market and treat it with what can only be described as reckless neglect.
Unfortunately what has happened is as the saying goes; they have ruined it for the rest of us. The irresponsible borrowing and buying has put the lenders at risk as they are finding themselves flooded with customers who can't repay their loans, and as such, the lenders now don't want to lend to anyone. Loan to value for buy to lets has dropped recently from 85% to 75% and it is estimated that with falling property prices, this will drop even further.
All this leaves an industry in great turmoil with very little prospect of recovery. What I suggest is, I would like to see forward thinking lenders come out with a professional buy to let product for landlords that have over ten properties. These landlords have already demonstrated they can fund purchases up to now and it would mean that they could get into a market that is quite beneficial for buyers in general. In addition this type of lending would have the result of producing some buyers in the market place which would at least keep the housing market moving at a trickle which is more than it is moving at the moment. - 16928
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Mortgage Route offers information help and advice on mortgages from qualified mortgage brokers along with free mortgage calculators and sourcing tools.
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