Do You Need To Be An Olympic Hurdler?

Eying up the hurdles that now face buy to let investments in this current climate  – daunting. You may need to be an Olympic  hurdler to overcome them and invest in property successfully.  The main top five which stop many are as follows:

  1. Deposits are now as much as 25% to – larger cash injection.
  2. Valuations are not meeting sell price – more cash to find.
  3. There are now large fees on arranging a mortgage – more cash.
  4. Standard Variable rates are not in line with the base rate – who is winning here!!
  5. Legal fees and all associated fees – more cash.

Let us take an £85K house that is on the market – and you get it for £80K (well done you may think). Based on a 20% deposit that is £16K to find for the deposit. Now along comes the valuer and he or she reckons that the property is only worth £75k and the mortgage company will only lend you £60K to buy the house – leaving you out of pocket another £5K! The mortgage company says that they have a great rate at 4.99% (4.49 points above the current base rate) and they want to charge £2K for the honour of giving you such a high rate. (who is benefiting there then!) The associated legal fees are a variable but  on these type of buy to let investments you should set aside another £1K. When you get your tenant in, you have the usual expenses of which are obviously a variable – but are time consuming and are by no means hassle free.

You will still need to shell out £24K.

£16K deposit

£5K shortfall due to valuation

£2K for a mortgage arrangement fee

£1K legal fees

Not particularly attractive – a fundamental reason for an alternative option!!!!!

Check our FAQs at The House Crowd http://thehousecrowd.com/thehousecrowd/faqs/

 

Today’s The Day

Today is the official launch of the world’s first crowdfunding property investment company. (That’s us by the way).

If you haven’t heard of crowdfunding before and want to know more you can read all about it on Wikipedia. We hope you all agree it’s a great idea that can help people achieve much better returns on their savings and do so without giving the leeches “ who’ve just decided to put up their standard variable mortgage rates – any business.

Question:Can someone please tell me what the point of signing an agreement that allows one side (i.e. the banks) to alter the agreed rate payable whenever they feel like it.

Seems somewhat unfair to me.