Interest only mortgages

Thrugelmir

VIGILANT22 wrote: »

Thrugelmir wrote: »

If need to free up cash to buy the property, suggests you don't have the necessary capital to fund an expanding empire.

Reducing a mortgage from repayment to interest only is scrapping the barrel. QUOTE]

.......and taking the above into consideration.... some would be very hesitant about raising capital/releasing equity to fund a deposit on another property and quite rightly so.....

Hesitant is an understatement. Equity release will be closely looked at by risk underwriters. The boom days are other and the window of opportunity allowed by lax lending criteria has gone.

Pincher

It's a tug of war between people who gate keep and people who sneak past them. Sub-Prime happened not because there were no rules about lending to bad credit clients, but because the rules were bent for commission and month end bonuses. There is no sea change in the attitude of salesmen, and their managers who got promoted because they produced "results".

As soon as competition hots up, these guys will be back to writing reviews that goes "Having made a personal financial audit, and a comprehensive market survey, we are recommending that we give this Buy-to-Let wannabe as many mortgages as possible, because I get my commission now, and I'll be long gone before the defaults happen."

From the landlord side, they will continue to test the fences until a weakness appears. A "specialist" mortgage broker that has a buddy in a lender's sales department will kick things off. Self-certification will get a different name, and it's back to business as usual.

Prices are down, interest is low, when is a better time to jump in? Lemmings, on your mark, get set,........here we go again.

VIGILANT22

Hmmm Before we start blaming salesmen/lenders etc...Just have a look around the forum you're posting on and see the questions other members post and the replies they receive....Just like this OP becoming "defensive" when asked questions any responsible lender/advisor would ask....

The FSA also have to take some responsibility....How daft is it that a BTL is an "investment" but is unregulated! this can be arranged by someone unqualified....

Thrugelmir

Pincher wrote: »

It's a tug of war between people who gate keep and people who sneak past them. Sub-Prime happened not because there were no rules about lending to bad credit clients, but because the rules were bent for commission and month end bonuses. There is no sea change in the attitude of salesmen, and their managers who got promoted because they produced "results".

As soon as competition hots up, these guys will be back to writing reviews that goes "Having made a personal financial audit, and a comprehensive market survey, we are recommending that we give this Buy-to-Let wannabe as many mortgages as possible, because I get my commission now, and I'll be long gone before the defaults happen."

From the landlord side, they will continue to test the fences until a weakness appears. A "specialist" mortgage broker that has a buddy in a lender's sales department will kick things off. Self-certification will get a different name, and it's back to business as usual.

Prices are down, interest is low, when is a better time to jump in? Lemmings, on your mark, get set,........here we go again.

You need to keep yourself better informed. Plenty of good discussion about these issues for months on the MSE forums.

Lending money is again about profit margin not sales targets and commission.

Gorgeous_George

There are plenty of lenders offering interest only BTL mortgages. The worse of teh risk is behind us.

Unlike residential mortgages there is little need for a repayment vehicle but I don't know if some/most/all insist on one.

IMHO.

GG

Thrugelmir

Gorgeous_George wrote: »

There are plenty of lenders offering interest only BTL mortgages. The worse of teh risk is behind us.

Unlike residential mortgages there is little need for a repayment vehicle but I don't know if some/most/all insist on one.

IMHO.

GG

Whilst a repayment vehicle isn't necessarily a requirement. If a property doesn't generate enough profit to cover capital repayments, then why take the risk? If I was to invest in property as a business I would be looking to expand my empire by using equity to secure further lending in the future. Not just assume that house prices will always rise vertically upwards.

Pincher

VIGILANT22 wrote: »

Hmmm Before we start blaming salesmen/lenders etc...Just have a look around the forum you're posting on and see the questions other members post and the replies they receive....Just like this OP becoming "defensive" when asked questions any responsible lender/advisor would ask....

The FSA also have to take some responsibility....How daft is it that a BTL is an "investment" but is unregulated! this can be arranged by someone unqualified....

I was blaming the BTL landlords as well.

We are in a period where the government backed lenders are licking their wounds and actively trying to shed mortgages to get their money back, rather than trying to compete for more borrowers. Lack of competition pushes up margins. Eventually competition will return, and margins will go down, and the need to increase volume returns. Maintaining high margins in a cartel would be anti-competitive, and illegal. Someone will break rank and offer cheaper rates for higher risks.

If you want to break the cycle, you have to make Buy To Let unattractive. All the government has to do is to license properties as fit for letting. HMO (House in Multiple Occupation) has proved quite effective. The time and cost of bringing substandard housing up to spec should be quite a deterrent. Your Principal Private Residence would be exempt, of course, as well as bedsits in a family home. The obstacle is existing council housing stock, which is a potential upgrade budget nightmare.

Hopefully, only landlords with professional maintenance infrastructure will be left, and people who need a place to live can buy or rent more affordably, when the speculators have left.

Nukumai

momo1975 wrote: »

No I want to change the mortgage on my 2nd house which is currently rented and has a repayment mortge (ie capital and interest)

If your second house is rented, why does it have a repayment mortgage? Interest only is almost always more efficient from a tax perspective.

Consider seeing an Independent Financial Advisor, who might offer you some helpful advice on taxation as well as the equity-release you are seeking.

VIGILANT22

Nukumai wrote: »

If your second house is rented, why does it have a repayment mortgage? Interest only is almost always more efficient from a tax perspective. .

It would appear this is a residential mortgage and not BTL, hence the repayment......

C_Mababejive

As an aside,surely an interest only mortgage would be ideal for say,someone who is single and has no family to speak of,to whom they would want to leave a property?