Be aware of building and planning regulations, while doing some serious building work or renovating

If you are planning to do some serious building work or renovate, make sure that you are on top of the requirements of all relevant building and planning regulations. Building control protects the general public by making sure that buildings are safe for people to be in. These regulations are valid only in connection with a building. So, freestanding garden walls, fences, drives or paths are not covered.

This department is also authorised and responsible for finding out that any building work is energy-efficient or not. Elaborate regulations are laid down regarding materials/methods of construction, assessment of plans as well as mandatory site inspections. The aim is to ensure that the building work you propose to undertake conforms to current requirements.

In fact, major building work will always need to be backed by a proper plan and the services of a building technician, building surveyor or architect, all of whom should well be aware of the current norms and regulations, the required inspections and also how they apply to the renovation work you are going to undertake.

Homeowners will be supported so that their properties are not repossessed, states the government

Homeowners will have enough support to make sure that their properties are not repossessed, the government has clarified. The assurance came after leading mortgage industry players met Housing Minister Caroline Flint and Chancellor Alistair Darling at 11 Downing Street. The Council of Mortgage Lenders (CML) termed the meeting as ‘useful’ and stated lenders were trying to play their role in keeping customers in their homes. 

Ms Flint stated after the meeting: “We wish to make sure there continues to be fairness and stability in the housing market, and that the support is there in place for consumers who may need it - right now.” But it was not outlined how they would prevent people losing their homes. 

There are increasing concerns over the acute increase in repayments facing an estimated 1.4 million individuals nearing the end of their short-term fixed rate deals, especially those who do not enjoy very high levels of equity in their properties.  Mortgage providers have already tightened up on lending, since the banks have not been coming forward to lend to each other. According to the CML’s latest figures, mortgage lending was down by 8 per cent in the first three months of the year compared with the first quarter of last year.

Open up a separate rental business bank account to manage your buy to let transactions

It may make sense to opt to remortgage your buy to let property if you have scope for the same. In such a scenario, you can make use of the extra borrowing for paying down the mortgage applicable on your primary residence. This way, you will get more relief and also have less to pay on your main or prime property.

Financial experts advise property investors to open up a separate ‘rental business bank account’ and ensure that they should put into the business account any extra money that is borrowed. If you later draw out from that business account to purchase something else, it would be treated as drawings from your business. You may even get business gifts as an incentive to open the account.

Another crucial piece of advice to buy to let investors is to plan ahead so that the size of your loan gets shrunk over a period of time in a systematic and phased manner. Banks have been gradually cutting the maximum amount they will lend to as less as 75 per cent of a property’s value. You should consider setting up a savings account. Any spare rent can accrue in it so you can cut down the ‘loan-to-value’ when the time to remortgage arrives.

Buy to let investors must make the most of mortgage tax relief on offer

Buy to let investors should ensure that they claim all their tax allowances. It is imperative to keep in mind that the taxman will treat investment property in much the same way like any other business. A buy to let investor can stake a claim for tax relief against rental income for most of his or her running expenses, comprising agents’ fees, repairs, and any utility bills that he or she pays apart from a general allowance of 10% of rental income for wear & tear if the property is furnished. This can largely cover the cost of sofas or beds, television sets, freezers and fridges, floor-coverings and carpets.

You should try to make the most of mortgage tax relief on offer. In fact, your biggest expense is in all likelihood to be mortgage interest. Landlords are required to pay tax on their respective rental income. However, the amount of mortgage interest paid can well be offset against this income for reducing your tax bill.

Of course, prior to worrying about the financial aspects, first and foremost, a buy to let investor should strive to make the property attractive – with necessary add-ons. This is the most vital piece of advice that investment advisors often give to their customers. Make your property ‘genuinely attractive for viewers’ - functionally and in terms of looks as well.

HSBC offers its new mortgages at exceptionally low interest rates

Britain’s biggest bank, HSBC, is making an effort to lure tens of thousands of harried mortgage customers whose fixed rate deals with other lenders are on verge of expiry.

But the bank has admitted it is exposing itself to offering new mortgages in some instances at what would now be ‘exceptionally’ low interest rates, even below the Bank of England (BoE) current base rate of 5.25 per cent.

The bank estimates that 72 per cent of its eventual customers will be paying a fee of less than £1,000 and that 57 per cent will be paying less than £600. Its deal will remain open to individuals whose fixed rate deals are set to expire by 30 June. The maximum loan will be £250,000.

Mortgage market observers think that it is a great deal for customers coming to the end of their deals who meet the bank’s criteria. The deal is indeed lucrative considering the fact that several other two-year fixed-rate deals are being priced at up to 6 per cent.  Analysts say that potential customers should first compare a quote from HSBC with other comparative deals on offer. How good a particular deal is will largely be determined by the size of the fee, they point out. The biggest fees, amounting to several thousand pounds, will mostly apply to individuals with low rates and big loans.

Key aspects to keep in mind when considering remortgage options

The most important aspects to keep in mind when seeking mortgage are:

1.    How you are going to pay back the capital that you borrow and.
2.    How you will be paying the interest on it.

Paying back the capital: You can either choose to pay back a little at a time as you go (repayment mortgage) or pay it all off right at the end (Endowment or Interest only mortgages).
Repayment mortgages: Each monthly payment cuts off a little of the underlying debt, as well as interest on the loan amount. The mortgage is cleared at the end of the term.

This is generally considered to be the easiest and simplest to understand and also the least risky mortgage type. But you should keep in mind the fact that if you are not able to keep up with repayments, the lender has the right to repossess the property.
On the other hand, with Interest only type of mortgage, you happen to pay-off the interest on the loan, albeit not the capital. You are expected to repay the capital at the end of the mortgage term, and how you fund is your call.

How to survive in today’s turbulent buy to let market?

Buy to let was flourishing largely because lenders were keen on relaxing their so-called stringent criteria, not even demanding a stipulated 30 per cent deposit. Now that the property market is witnessing a slide, banks have become picky and private lenders are getting choosy about the new customers.

Instead of panicking, it is a good time to check your buy to let portfolio to see whether you are making the most of it. By taking some simple steps, you can sustain and survive the property market slump.

Amidst all the bad news flow, there are some positive indications, to soothe your frayed nerves. It has been observed that demand for rented properties is still on the rise. In fact, according to a news report, average rents across the country have reached a new high over a decade. On the downside, the overall property market sentiment is slightly damp. With such contrasting signals emerging, the first key thing to do is put up your rent. Subject to your rental agreements, you may see scope for increasing the rent, especially if you can spend money on sprucing up a property.

Maintaining positive cash flow is key to successful buy-to-let transaction

The biggest advantage of buy-to-let property transaction is cash flow boost it provides. It can greatly boost the monthly cash flow. This is the cash, which flows into the business, less the cash flowing out, over a given period (a month, in this case) Remember, this is not the same as profit! Depreciation is not necessarily taken into account as part of a cash flow statement whereas it does appear on a profit and loss statement. Broadly speaking, if the cash flow is positive, the transaction will be profitable. This simple calculation will help you work out the financial implications of your buy-to-let investment. Up front cash flow is another important parameter. It comes from upfront payments that your tenants provide you for their tenancy.

As long as you can maintain positive cash flow, rental homes are a great long-term means of making money in real estate. It is an inflation adjusted retirement plan because rent and so your income goes up with inflation.

However, many people tend to confuse making money from rental properties with making money by speculating on price appreciation. You can certainly manage to do both with rental homes, but the desire to gamble on prices leads many to buy rental homes, which may ultimately result in more money going out (outflow) than coming in (inflow), negatively impacting the overall cash flow.

HSBC looks to take away the anxiety of mortgage seekers

In an effort to attract mortgage customers whose fixed rate deals with other lenders are about to expire, HSBC has started matching their expiring fixed-rate mortgage deals for a further two years. However, the offer will be open for only five weeks. Also, new customers will need to put down a minimum 20 per cent deposit.

HSBC relies less on the financial markets for raising the funds for its mortgages than other lenders. The bank is keen on taking advantage of the weakness of its main competitors in the mortgage market. The bank’s head of mortgages, Martijn Van Der Heijden, explained: “”Many homeowners are worried about their monthly repayments going up and we can help take away that anxiety.” The bank is expecting heavy demand for its latest offer and will utilise three times the usual number of staff for handling applications.

A bank spokesman asserted that it would be fussy about whose business it took on, and clarified that it was not looking to hoover up countless mortgage holders who may have taken a mortgage just recently with only with a small deposit. The minimum mortgage rate will be 4.54 per cent under its deal.

Bad credit can act as an impediment to prospective buy to let investors

Let us first try to understand who and why is forced to go for bad credit mortgage.
•    To start with, keep in mind the fact that your existing liabilities and your financial health defined in terms of your net worth can count a lot while applying for a mortgage.
•    Your overall liabilities comprise all that you owe to your creditors. On the other hand, your net worth is estimated or calculated by subtracting your liabilities from your assets.
•    Your credit score or your credit report tells the creditors if you are creditworthy. If your credit score is negative then financial institutions are not easily ready to give your mortgage.
Of course, there is no need to worry since you can still qualify for bad credit mortgage. There are select schemes on the market for people with poor credit, or no credit. You will sure qualify for one of those bad credit mortgages.

The crux of the matter is that all of us at some stage or the other are required to borrow money from one source or the other. However, if you are able to plan out and space out your borrowing requirements well, it will result in saving of precious time, energy and money as well.