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Mortgages Week: An overview of the buy to let mortgages sector

POSTED: 18th September 2013
IN: Personal News
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Aldermore's week-long series of blogs providing advice and information for potential property investors begins with a look at the current UK buy to let market.

News this week that average property prices have now recovered to pre-crash levels brings with it strong implications for buy to let investors. Current rental property owners are generally benefitting from growth in the valuation of their properties, though it's important to note the trend has not been uniform across all UK regions. In fact, the rise has largely been buoyed by London house prices experiencing 9.7 per cent growth in the twelve months to July, according to figures from the Office for National Statistics.

In contrast, rising house prices offer a less favourable outlook for those looking to become first-time landlords or expand their portfolio, making it more difficult to raise the necessary funds to enter the market. In addition, declining real wages may place a limit on rental incomes, restricting the profitability of any buy to let purchases.

Despite these factors, falling interest rates on mortgages, fuelled in part by the government's Funding for Lending Scheme advancing capital to lending institutions at a more affordable rate, have led to significant growth in the buy to let market. Recently published data from the Council of Mortgage Lenders shows almost £1 billion was advanced to buy to let investors purchasing property in July, representing a 12 per cent increase on the previous month in the number of loans advanced.

These findings clearly signify an opportunity to take advantage of the current low interest rates. Potential landlords are warned to carefully forecast cash flows before making a purchase though, particularly since buy to let mortgages typically involve higher deposits than those extended to homebuyers.

Additionally, it's also important to review the full range of mortgage providers and the products available in order to decide on the most suitable option. This means paying particular attention to factors such as portfolio size limits, minimum income requirements and any additional support services offered, beyond just performing a basic rate comparison.

Contact Aldermore for more information on the Bank's highly tailored range of mortgage solutions, covering both first-time investors and established landlords. 

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  • Personal
  • Buy To Let
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  • Residential Mortgages

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