Saturday, Jan 24, 2009
Summary of today's BTL market
Motley Fool: Buy-To-Let Mortgages In 2009
"Two years ago a lender would offer you a deal if your expected rental income (as determined by a valuer) covered 110% of your monthly mortgage repayments. Now this has risen to an average of 125% or 130%. And many of the lenders which had reduced the buffer you needed on rental income have gone bust."
Bust, you say? On a property investment? Surely not!
Posted by jimmy_joe @ 12:17 PM (340 views) Add Comment
4 Comments
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1. little professor said...
Ouch. Looks like most deals are at a max of 60-70% LTV. How many proberdee developers have that sort of cash lying around, espeically as any equity they may have had from previous properties is rapidly shrinking.
2. str 2007 said...
Taken from the comments
''My Lender didn't want to know me 3 months ago when I came off a fix 5% deal to their SVR 7.2% now they contact me as the SVR has dropped to 4.2% and still falling. Their best rate they could offer was 4.5% plus fees. Can't wait to my other deals expire in 3 months. Happy days''
Bailed by Gordon it seems.
3. str 2007 said...
The thing is with rents falling most won't qualify any more in the 125-130% rent coverage of mortgage.
Further our friend won't be looking quite so smug when his lender issues a margin call to top up his equity.
4. str 2007 said...
Another post taken from the comments
''What a lucky escape, and your rents still qualify to cover your mortgage repayments.
Next big story this year not covered in the article will be margin calls. Lenders asking Landlords to top up the equity level to the agreed amount (check your small print).
Average BTL mortgages were running at 66% LTV. Take away from the 34% equity level the 20% house price fall to date and you're left with about 14% equity (or roughly 60% less equity than there was about 14 months ago.
With prices falling at about 2% per month the remaining equity is likely to have vanished by July.
The minimum equity requirement is usually 15%.
Hope most BTLers have 15% of their portfolio value tucked away in cash because they're going to need it in the summer.
Ouch.''
60% of a BTLers equity gone in 14 months - wow I thought it was tough being a saver holding Sterling !
Still at least they didn't have to work too hard for it. Easy Come Easy Go !