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First-time buyer pitfalls: Finance expert warns of ‘common costly mistake’

August 12, 2024 interestratesinfo

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People aiming to profit from their property could be making a significant and costly error in how they calculate their income.

Real estate is often viewed as one of the most valuable investments, especially if you plan to rent out the property, but a common oversight can lead to a hefty cost in the future, as one expert has pointed out.

Former financial advisor Joe Saul-Sehy, speaking on the Afford Anything podcast with Paula Pant, warned that first-time buyers frequently misjudge their gross and net income from the property because they neglect to set aside an emergency fund for it.

He advised landlords to allocate some of their rental income for future maintenance, cautioning: “For people squeezing as much water out of that sponge as they can get, (they) might also be robbing that account, which is a mistake.”

Landlord exodus ‘higher than anticipated’, says agency group boss

August 12, 2024August 12, 2024 interestratesinfo

The market is witnessing a significant shift as a number of landlords exit due to increasing legislative pressures, tax liabilities and the removal of mortgage relief, says Antony Lark, joint CEO of estate agency and lettings group Spicerhaart.

Rents have begun to stabilise, despite the exodus of landlords from the sector and resistance over rent reductions, says Lark.

He explained: “We’re noticing that the level of landlords leaving is higher than anticipated – particularly among those who’ve retired, who need the money to meet rising living costs, or are helping children buy first homes, or who’ve concerns over inheritance tax.

Flats emerge as the top buy to let investment

August 12, 2024August 12, 2024 interestratesinfo

Falling property values and soaring rents make flats the most profitable option for landlords, according to new research.

The findings from Inventory Base show that flats currently offer the highest returns for BTL investors.

Despite a slight decrease in average flat prices, rental values for flats have surged by 9.3% annually, outpacing all other property types.

The property inventory specialist compared average yields across flats, terrace homes, semi-detached and detached properties.

Martin Lewis warns UK households who have ‘fixed mortgage ending in 2024’

August 12, 2024August 12, 2024 interestratesinfo

Fixed-rate mortgage deals have dropped below 4% for the first time since April – though only for those with at least a 40% deposit or equity in their home. However, mortgage brokers say rates could continue to fall as the year goes on.

Rate cuts to fuel house price rises, Halifax says

August 12, 2024August 12, 2024 interestratesinfo

Lower mortgage costs and more interest rate cuts could fuel a rise in house prices for the rest of this year, Halifax has said.

The mortgage lender’s prediction came after property prices ticked up in July following a flat few months.

Halifax said recent mortgage rate drops were “encouraging” for first-time buyers, those moving along the housing ladder or those refinancing.

But it warned affordability challenges and lack of available properties still posed problems for buyers.

“Against the backdrop of lower mortgage rates and potential further [Bank of England] base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year,” Amanda Bryden, head of mortgages at Halifax said.

Last week the Bank of England lowered interest rates to 5% – the first cut since the start of the pandemic in March 2020, but its governor warned not to expect a flurry of further reductions.

‘Landlord licence’ now costs average of £700 as more councils force buy-to-let owners to register

August 12, 2024August 12, 2024 interestratesinfo

Thousands of landlords in England are facing increasing costs due to selective licensing schemes imposed by local councils, according to a Freedom of Information request.

The FOI request by insurer Direct Line revealed that landlords in areas which require a licence are being charged £700 on average to get one.

Councils in certain parts of England require landlords to get the selective licences in order to to rent out property, in the hope that this will improve standards and quality.

The schemes require landlords to meet certain standards of management and maintenance and are often accompanied with regular property checks.

A licence typically lasts for a maximum of five years once granted, but councils can opt to issue them for a shorter period.

I’ve got a mortgage offer on my new home – is it worth the £1,499 fee?

August 12, 2024August 12, 2024 interestratesinfo

Question: I’m getting a mortgage of £180,000 on a £200,000 property. The rate I have secured looks good – it’s around 4.8 per cent over five years – but it comes with a hefty £1,499 fee. How important is the fee when getting the loan? Is it worth going for a worse rate with a lower fee?

Answer: Congratulations on securing a mortgage offer of £180,000 on a £200,000 property. This is with an appealing interest rate of 4.8 per cent over five years – I assume it’s the deal from HSBC.

It’s understandable to question the product fee of £1,499, which is on the higher end. You may be considering whether going for a lower £999 fee or a fee-free option from Virgin Money at 4.89 per cent might be a better choice. The product fee raises several important questions that need careful consideration.

‘I’m a property expert – this is why mortgage interest rates are dropping slowly’

August 12, 2024August 12, 2024 interestratesinfo

In positive news for mortgage borrowers, the Bank of England finally has lowered the central interest rate for the first time in four years.

Millions of homeowners are due to come off their cheaper fixed-rate mortgage deals in the coming months, leaving many questioning what type of deal to go for next.

With a 0.25 percent cut to five percent, the Base Rate is still high and the impact won’t be felt “widely”, an expert has said. However, there are deals people may want to opt for to put them in a more “favourable” position for the years ahead.

We asked Andrew Boast, a property expert at SAM Conveyancing the current mortgage market trends, his expectations for rates over the next few months, and what length deals people should look into based on current forecasts.

Connells says: “No sign of landlords quitting buy to let sector”

August 5, 2024August 5, 2024 interestratesinfo

In a statement which appears to go against the trend of much of the lettings sector, Connells says it sees no sign of landlords quitting the buy to let sector.

This appears at odds with data from some organisations and agencies – including Hamptons, owned by Connells – which appear to show fewer landlords in the sector now than in recent years.

But the Connells Group – in its trading statement for the first half of 2024 – says rental supply ended June with 24% more properties available than at June 2023.

And it says that the company “saw no significant signs of landlords exiting the market” with some 77% of properties re-let at the end of their tenancies. That’s the same figure as last year.

The average tenancy length was 30.9 months, about 10% up on a year ago.

10 essential questions to ask your mortgage lender before borrowing

August 5, 2024August 5, 2024 interestratesinfo

Buying a home can still be a smart move in today’s high-rate environment, of course, provided that the financials make sense for your budget. But given today’s elevated home buying costs, it’s crucial to gather all the information you need before making this substantial investment.