Reply to: BTL Mortgages 2013

[d000hg]

There isn't really space to do that - there are a few blocks of flats and they even built a brand new college - but all the space in the city is already full of housing so it would have to be outside the city where there is no shortage anyway... students simply want to be in the town centre.

Given students are already looking in February for their houses in October, and windows have signs "this house is not for rent, go away", this tells you a lot.

It helps most landlords bought when prices were 1/3 what they are now, they must be raking it in.

[eek]

BTL is booming here, but it's a university city and the city is very small compared to the university size.

We have the problem that every time a house comes on the market, BTL investors swarm all over it, planning how a lovely 3-bed family house can be ruined by turning it into a 6-bed POS that nobody else would ever want to buy again.

That's worked really well elsewhere until the university bring in private sector builders to build new high quality flats and improve the quality of housing.

Granted outside the newer campuses (Stockton) the uni has a reputation which means quality of housing is not a deciding factor when choosing it but personally I wouldn't risk a student BTL investment. People elsewhere have found out how quickly a university can add 1000 or 10,000 student rooms without too much effort.

[d000hg]

BTL is booming here, but it's a university city and the city is very small compared to the university size.

We have the problem that every time a house comes on the market, BTL investors swarm all over it, planning how a lovely 3-bed family house can be ruined by turning it into a 6-bed POS that nobody else would ever want to buy again.

[Martin@AS Financial]

Big things are expected for the BTL market this year:

Buy-to let lending looks set to pass boom peak in 2013

[Martin@AS Financial]

Presently you really need a minimum of around a 25% deposit. There are a few 20% mortgages available (see what i did there) but the rates aren't great.

Rates are starting at around 3% (75% LTV - less with more deposit) which is historically low for BTL. As with anything, you need to look under the surface of the headline rate as some providers are charging eye watering fees - eg 3.5% of the loan size. Essentially, all this does is front load the rate significantly so calculating the total cost of borrowing is vital.

When considering property, ideally you want to be looking at a 5% rental yield of the purchase price. For your own piece of mind factor in at least 125% rental to mortgage coverage so if anything goes wrong such as the boiler, you have built a war chest to get it fixed.

[doodab]

Of course a loan is a product. It's surely not a service. I can buy a loan, and sell it to someone, and make a profit in doing so. It's an entity not an ongoing service.

Except that what you are buying and selling isn't what was delivered to the end user. You're buying the risk and reward of providing them with the service they paid for.

[vetran]

Of course a loan is a product. It's surely not a service. I can buy a loan, and sell it to someone, and make a profit in doing so. It's an entity not an ongoing service.

unfortunately it isn't, you may resell the risk on the mortgage but the contract between you and the householder remains.

You sell your car and its gone.
You Finance someone's car and its not done until all the money is paid and the ownership transferred.

It seems that anything that allows the banking sector to assume a veneer of respectability is in.

[d000hg]

Of course a loan is a product. It's surely not a service. I can buy a loan, and sell it to someone, and make a profit in doing so. It's an entity not an ongoing service.

[vetran]

Handbags away please gents, its sad.


Martin can I have a BTL product in green with go faster stripes please.

In Commerce Its a service, products are tangible and manufactured.
Finance tries to give the illusion of creating something real so no one realises its a pack of cards and a Hurricane is coming.

Plus of course you can 'package a product' whereas you have to create and supply a service.

[sasguru]

You don't think they have mortgages and loans in Germany?

Why don't you stop selling your services, since service industry is so silly, and grub around growing potatoes in your garden?

I'm reasonably sure they're not called or thought of as "products" in Germany.
And that's probably why relatively so few people have mortages and loans in Germany.

Where did I say the service indystry was silly?
You must get tired of the whooshing noise that constantly erupts around your dense noggin.

[d000hg]

[Edit] That's what I mean about the UK. We call loans "products", in Germany products are Mercs, BMWs, Mieles and machine tools they sell for cash to make them rich.

You don't think they have mortgages and loans in Germany?

Why don't you stop selling your services, since service industry is so silly, and grub around growing potatoes in your garden?

[sasguru]

And your missus is paying for it with 50% income tax and 10% national insurance, whilst you sit on yer arse and talk bollux.

I compensate for that with my Ltd.
And after all I did very well out of the Labour housing boom, so I don't really care about the bankers bailout

[DimPrawn]

In fact I think the banking industry sold a multi-billion/trillion "bailout product" to the government.

And your missus is paying for it with 50% income tax and 10% national insurance, whilst you sit on yer arse and talk bollux.

[sasguru]

In fact I think the banking industry sold a multi-billion/trillion "bailout product" to the government.

[sasguru]

What about an insurance product?

What has been produced when you buy insurance? Maybe security and cash flow for the insurance company. Still think "product" is the wrong word to use in a financial instrument context.
It sort of suggests that the financial and manufacturing industry are roughly the same in that they "produce" things and as we have seen in the last 5 years that's not the case.