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First time buyers being ousted by buy to let

Thursday, April 28th, 2011

It has been claimed that a rising number of buy to let buyers are coming onto the market and that this is resulting in an even greater number of first time buyers being ousted from the market. There have been signs of improvement in the property market of late, but it appears that those benefitting the most are investors who are buying to let.

According to reports banks are far more keen to lend to buy to let investors compared to first time buyers for a number of reasons. Buy to let investors often have a lot of experience in the market, they have proven credit history and records, and they usually have a meaty deposit to put down, all of which helps to reduce the risk to banks. Many first time buyers, on the other hand, have little in the way of deposits, are purchasing property for the first time, and sometimes have little in the way of credit history. All of this equates to a higher risk for the banks.

The high demand for rented property, which has soared over recent months, has added to the interest in buy to let mortgages, with many people preferring to plough their money into property investment where they can make a good return on their cash rather than putting it into savings where they get little or nothing in returns in the current climate.

One official said: ‘Lenders are making no secret of the fact that they would rather allocate the limited funds they do have to the lower risk option of buy-to-let loans, with deposits of 25-40%, than first-time buyers loans with 90% loan to values. As a result, the buy-to-let sector is recovering at a remarkable rate, as investors are drawn back by the need for a long-term, low-risk investment for their cash.’

Tags: business, council of mortgage lenders, fact, Business Finance, time, first time buyers

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Now could be a good time to invest in property

Saturday, April 2nd, 2011

There are many people out there that are wondering how they can make money on their heard earned savings given the fact that savings accounts are offering little to nothing by way of returns. Since the base interest rate fell to just 0.5 percent two years ago many homeowners have welcomed the lower repayments that have come from the base rate drop. However, the news for savers has not been so good, with interest rates on savings plummeting.

For those with life savings to invest there are a number of options available, and some officials believe that now could be a good time to invest money in property. There are a couple of reasons for this. At present property prices are more affordable than they have been over recent years. Whilst some sellers are putting properties up at higher prices they are failing to secure sales because many would be buyers cannot get mortgage finance. This makes it more likely that sellers will drop their price for those that are willing to buy and especially for cash buyers who are ready to make their move.

A second and very significant reason for investing in property is the sky high demand for rented property amongst those that are unable to get mortgage finance or do not wish to take on a mortgage at present. This means that those planning to invest in property and then rent it out could make a nice profit as many people are keen to rent a home privately, with some even placing sealed bids and gazumping one another in terms of how much they are willing to pay each month for the privilege of renting the property.

There are a number of things that you need to think about when choosing a property for investment. For example, it is important to have your property is an area where you will get a lot of interest from would be tenants and where there are essential facilities and amenities nearby depending on your target group. For example, if you want to rent to students make sure that the property is close to a university or college.

Another reason to consider the location is that house prices vary widely from one area to another, as has been shown in a number of recent reports. This will have a significant impact on your initial investment.

Tags: cannot, finance, present, time, base interest rate, essential facilities, news

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Clearing debt is still more important than saving

Tuesday, March 22nd, 2011

For many people it has been difficult over the past few years to decide whether to put any spare money into savings so that they have cash to emergencies or for luxuries and treats, or whether to use their spare money to pay down their mortgage and clear other debts. Of course, few of us have what can be described as ’spare’ money these days. However, for those of us that have variable rate mortgages the repayment amounts have been much lower over the past couple of years because of the rock bottom interest rates stemming from the all time low base rate of 0.5 percent.

Many homeowners with variable rate mortgage have been delighted that interest rates have remained low for the past two years. This has seen their monthly repayments plummet in some cases, leaving them with far more in the way of disposable income each month. However, there are been mixed reactions in terms of how this spare money has been used each month by those that have saved on their mortgage repayments.

Whilst it is important to have some money in savings in order to fund an emergency of in case of a job loss it is important not to focus solely on saving the money each month. Even though many believe that the interest rates could increase soon it is still worth spending however long is left in terms of lower repayments using the money to pay off some debt. Some people have used the spare cash to reduce the mortgage by overpaying on it. However, for those that have unsecured high interest debts such as credit cards and loans it may be an idea to spend as long as possible paying these off with that money.

The first thing to bear in mind is that if interest rates do rise, as is expected, then monthly repayments will also increase. For some people this could come as a financial shock, and if there are also unsecured debts to cope with this could make things very difficult. Paying off the unsecured debts means that if rates and repayments do increase the financial changes will be easier to cope with.

Also, bear in mind that the current returns on savings are very low, which means that you will save far more by paying off high interest debt than saving money in a low interest account.

Tags: Credit card, time, low, unsecured debts, shock, mixed reactions, financial changes

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Don’t be left high and dry with pensions

Wednesday, February 16th, 2011

In the past having high levels of debt is something that has commonly been associated with younger people. However, it has emerged that more and more older people are now struggling with personal debt levels, making it difficult for many to be able to enjoy their retirement. For those that still have a fair amount of debt when retirement comes around there is no other option other than to continue working, as otherwise they will find it impossible to make repayments on their debts.

However, those with a decent pension pot may find that they can still afford to retire and can use part of their pension money to repay any debt that they have outstanding at the time that they retire. In order to do this, however, consumers need to ensure that they have an adequate pension that will allow them to make these debt repayments and leave them enough to enjoy a pleasant and comfortable retirements rather than leaving them struggling to make ends meet.

A huge number of people in their 30s and 40s have little or nothing by way of a pension pot, and whilst retirement may seem like it is still a very long way off it can come around far more quickly than many expect. This leaves many people in the difficult situation of having to determine whether or not they can actually afford to retire on the pension that they will receive, which is particularly hard if you still have outstanding debt. For many the only option is to continue working in order to be able to afford living costs.

A survey was recently carried out by the Prudential showing that more and more people that were coming up to retirement age were considering staying on at work for up to ten years in order to earn more money and increase their pension pot. However, some forward planning means that future generations that are coming up to retirement in years to come may not have to face this difficult decision. Prudential officials have said that consumers should start planning their pension early and should seek financial advice from experts to ensure that they get the right pension for their needs.

An official from Prudential said: “This year will see the phasing out of the default retirement age, making it easier for those wishing to stay on at work. Additional retirement income is also becoming more important as the security of a defined benefit pension scheme disappears for many people.” He added: “Seeking advice from a financial adviser should be a prerequisite to ensuring you achieve the level of pension income you want and need.”

Tags: pensions, default, time, official, difficult situation, decent pension, age

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Officials urge consumers to make use of their credit files

Friday, January 28th, 2011

The financial sector and climate in the UK is still extremely fragile, and for the millions of people hoping to get a loan or credit card things have become increasingly difficult. Research has recently been carried out into the level of rejection that consumers are experiencing when it comes to getting finance such as credit cards and loans.

The research was carried out by moneysupermarket.com and showed that over the past year over 25 percent of applicants in the UK had been turned down for a loan or credit card, which equates to around 4.5 million consumers. Officials are concerned that this could result in millions of people causing further damage to what may be their already damaged credit files, and this could further reduce their chances of getting affordable finance in the future.

Consumers are being advised to familiarise themselves with their credit file prior to applying for any form of credit, as the state of the credit file and history is one of the things that lenders will look at when deciding whether to grant a loan or credit card. This is why it is important for all consumers to make sure that their credit file is in a decent state before applying for credit.

An official from Moneysupermarket.com said: “The decision to borrow should never be taken lightly, but credit cards still have a huge role to play in the nation’s finances if used correctly. However, it’s worrying to see such a huge number of people being rejected for credit cards or loans, especially as you could avoid being declined by taking the time to research the best card for their needs. Rejected applications can have a damaging affect on your credit score and further reduce the chances of you qualifying for another credit product in the future.”

Tags: best card, fragile, time, damage, credit score, credit files, credit

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Low mortgage approvals could lead to falling property prices

Wednesday, December 1st, 2010

Industry experts have said that property prices in the UK could be set to fall again amidst low mortgage approvals. The news comes after figures were released showing that October saw the lowest level of mortgage loan approvals since February. The figures were released by the Bank of England, and showed that mortgage approvals had fallen for the sixth month in a row.

During the month the total number of mortgage approvals came to 47,185. In a consistent market the expected level of mortgage approvals for the month would be around 70,000. Industry experts have said that the mortgage market is still ’severely depressed’. They have also warned that property prices do not show any signs of improvement.

One economist said that six months of mortgage approval falls reflected the severe difficulties that the mortgage market was still experiencing, and added that things were unlikely to change for the better over the course of next year. Banks are becoming increasingly strict with regards to mortgage lending in light of fears relating to job losses stemming from public sector cuts.

Further reports have shown that those with smaller deposits are likely to continue facing much higher rates of interest on mortgages even though there are now more mortgage products available that there were when the country was in the midst of the recession.

One economist said: “The sixth consecutive monthly fall in mortgage approvals for house purchase underlines the message that the mortgage market is severely depressed. We expect it to remain that way throughout 2011. The troubles in the mortgage market are still with us. With little chance of a meaningful recovery in mortgage approvals for the foreseeable future, we expect that credit conditions will continue to weigh on house prices for some time to come.”

Tags: Public sector, credit, way, mortgage, time, number, light