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40% Of Btl Cannot Cover Mortgage If Rates Rise Just 2%


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The attached article shows that the BTL market is perilously close to the line. This obviously has huge implications for the future of house prices generally and supports the argument that easy BTL mortgages have been a serious factor in pushing up prices. www.mortgagestrategy.co.uk/1015181.article

But surely they will just be able to raise the rents whenever they fancy?! Isnt that how it works :unsure:

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But surely they will just be able to raise the rents whenever they fancy?! Isnt that how it works :unsure:

Oh dear. If my rents were only just covering my mortgages I would be getting out now.

Homes Under The Hammer was more interesting this morning. A guy who expected capital appreciation only over 10 years plus. But they kept going on about prices returning to 2007 levels, but I am not sure they will ever hit those insane heights, relative to wages, again. So, he may have an inflation hedge, but may not see capital appreciation.

Edited by Tonkers
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Rates won't rise.

The reason the budget is being cut so dramatically is so that they don't have to.

FWIW it amounts to the same thing as regards HPC, but not for business. Either hundreds of thousands unemployed and unable to pay even low rates or rates going so high people unable to pay the debt.

Rates stay low for business reasons. That's why the government is trying to invent separate controls for housing and industry, because rates were/are too blunt an instrument.

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i told my friends who are renting at 650 per month, (they have been good tenents for 2 years,) to tell the lanlord they are leaving, unless he can reduce the rent, from september when they renew, at first he said no, but has since agreed to it, as they said there were 100's of houses to rent in their area,

it is only reduced by £75 a month, but he must have realised if he cant get anyone for his price and it was empty for 2 or 3 months or more. it is worth it to him to reduce it,

good news again

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i told my friends who are renting at 650 per month, (they have been good tenents for 2 years,) to tell the lanlord they are leaving, unless he can reduce the rent, from september when they renew, at first he said no, but has since agreed to it, as they said there were 100's of houses to rent in their area,

it is only reduced by £75 a month, but he must have realised if he cant get anyone for his price and it was empty for 2 or 3 months or more. it is worth it to him to reduce it,

good news again

Good on them....if you don't ask you don't get. ;)

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I just cannot understand why anyone would choose to go into BTL if, to do so, they need a big mortgage, that barely covers any rent they are getting?

Many have thought that the capital appreciation they expect over a 10 year period more than outweighs the risk. However, as property became very expensive by 2005 it just did not add up. Lenders must have become very lax since their lending criteria used to be; max 85% LTV, Plus proof an expected rent would cover 1.3 x the mortgage payment at about 6% rates. Needless to say, thousands of loans do not in reality match this criteria and many unlikely 'rent assessments' have been accepted as realistic by lenders who did not care as long as their bottom line looked good.

The BTL brigade thought they would just remortgage their way to heaven every few years on the back rising values and rents. I don't think there will be any CGT to pay for many of them. It's going to be over when the HPC is in full swing.

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Rates won't rise.

The reason the budget is being cut so dramatically is so that they don't have to.

FWIW it amounts to the same thing as regards HPC, but not for business. Either hundreds of thousands unemployed and unable to pay even low rates or rates going so high people unable to pay the debt.

Rates stay low for business reasons. That's why the government is trying to invent separate controls for housing and industry, because rates were/are too blunt an instrument.

Yes. I think rates for residential lending will rise gradually, as they are already doing for SVR's, without any help from the BoE. The money markets and a shortage after the Liquidity scheme expires will see to that!

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i told my friends who are renting at 650 per month, (they have been good tenents for 2 years,) to tell the lanlord they are leaving, unless he can reduce the rent, from september when they renew, at first he said no, but has since agreed to it, as they said there were 100's of houses to rent in their area,

it is only reduced by £75 a month, but he must have realised if he cant get anyone for his price and it was empty for 2 or 3 months or more. it is worth it to him to reduce it,

good news again

Nice. :)

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i told my friends who are renting at 650 per month, (they have been good tenents for 2 years,) to tell the lanlord they are leaving, unless he can reduce the rent, from september when they renew, at first he said no, but has since agreed to it, as they said there were 100's of houses to rent in their area,

it is only reduced by £75 a month, but he must have realised if he cant get anyone for his price and it was empty for 2 or 3 months or more. it is worth it to him to reduce it,

good news again

Even at £75/month off, the Landlord will be making more money now than he was 2 years ago if like me he is on the SVR for his mortgage.

If they are good tennants then it is a win:win situation for both.

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