Tuesday, June 9, 2009

Buy to Let investors face detrimental alteration to existing mortgage terms

Buy-to-let borrowers warned about lenders' tactics

The Residential Landlords Association (RLA) has warned buy-to-let borrowers that lenders may try to change their borrowing rates as property values fall.The association highlighted that some mortgage agreements enable lenders to alter their rates if the loan-to-value ratio (LTV) changes substantially.For example, an 80 per cent mortgage on a £100,000 property would become a 100 per cent mortgage if the property dropped in value by £20,000.However, the RLA said of even greater concern were scenarios where lenders claim to be able to produce "valuations" in support of their own cases, even though the landlord’s portfolio of properties could be shown to meet the original LTV.

Posted by jack c @ 11:48 AM (767 views)
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3 thoughts on “Buy to Let investors face detrimental alteration to existing mortgage terms

  • Fictional valuations were never a problem for the RLA when prices were going up …

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  • How dare they reducing the value of property portofolios of these hardworking people !

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  • These poor landlords. I think the idea of investing a few hundred thousand into a “sure thing” without doing any research should be encouraged…

    And bad, nasty banks for making sure they have security over their loans!

    (actually I would have a lot of sympathy for private owners in this situation)

    Anyway – (sorry – just being in the middle of accountancy exams) – the ‘credit crunch’ would be enough of an indicator to a business that its investment property is impaired, and it would have to revalue it in its accounts. Why shouldn’t landlords be held by the same standards – they are engaged in business activity after all…

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