70% LTV Max!
It seems ridiculous, but it looks like buy-to-let loan-to-values are going to drop to a maximum of 70% within the next few weeks as Birmingham Midshires (part of the HBOS group) is taken over by Lloyds. Lloyds' maximum loan-to-value on buy to let property is currently only 70%
Although your other choice is still Platform, who are still at 75%, you'll be paying 7.24%; outright extortion considering the base rate at 1.5%. We also have Natwest weighing in at 75% still at 6.59%. This all means that you'll be able to access 75% mortgages but at a very prohibitive rate. In most cases it would be better for your investments to put in another 5% with the view to taking it out in 2 years once the initial period is up.
This could present another blow to the industry that has already taken massive knocks over the past year. Having property investors come up with such a massive deposit is just ridiculous especially considering that people's pension has dropped sharply in the region of 17%. Clearly Tony Blair and Gordon Brown's lack of foresight is costing families in Britain dearly. It's clearly time that Gordon Brown's new government used all its powers to force banks to rethink their lowering of loan-to-values to free up the lending for both business and individuals.
The Australian Banks despite being in the same recession have maintained their loan to values at 90% for buy to lets. Such a shame that the UK banks feel that they can so easily shun the very people who have been and still are making them so much money!
Consider Birmingham Midshires. Their tracker rate is 3.69% above base plus a 2.5% arrangement fee – extortionate considering it's a two-year deal and also considering where the LIBOR rate is currently at. One commentator has said that the banks are putting away an extra £120 million by not passing on the interest rate drops.
Regardless of what happens to loan-to-values, it's still worthwhile jumping into some of the available deals that are about. Developers' stock levels are at an all-time low, and many are unable to get further funding without showing exchanges in place. This will create a serious shortage in supply very soon (Especially given the surge we have seen in enquiries and sign ups).
No matter what, though, it appears that the next three months will be an awesome time to invest, so call the team on +44 (0)207 923 6100 and they can take you through all the details.
Live with passion,
Brett Alegre-Wood
