Property Investing Today
Many landlords built up their property portfolio when the market was buoyant and house prices were flexible and good mortgage rates readily available. This meant that landlords could build a portfolio quickly, and by using money from one property to finance the next until they had several properties. In a rising market, this approach was very attractive but unfortunately the Credit Crunch and Recession changed all of this. Financing property investment can be very hard today, and 90-100% mortgages are no longer available.

This has resulted in many landlords being unable to remortgage, as they have little or no equity. Mortgage rates aren’t attractive any more and investing in several properties is no longer an option as the financing isn’t as readily available.

A recent report in ‘Mortgage Strategy’ (14.7.10) showed that 4 in 10 landlords believe that they would be unable to cover their mortgage payments if interest rates increased by 2%. At the same time, a poll carried out by Spareoom.co.uk has revealed that 43% of landlords were unable to meet their commitments if interest rates rose by 2%; for as many as 22% a 1% rise would cause problems, and for 10% even a 0.5% increase would create a rent-mortgage shortfall.

Accidental Landlords

There has also been a rise in ‘accidental landlords’; those who have taken ownership of a property which they have inherited. These landlords have no desire to own a rental property and find the situation stressful and costly, and not a position they ever wished to find themselves in.

What Are The Options?

If you fall into either of these categories, you aren’t alone. You are probably very worried about how long you can carry on supporting your property portfolio by using your personal funds to meet any mortgage shortfall, as well as repair costs, letting fees, etc.

In these hard times, there are some options you could take into consideration:

1. Could you put up the rent on your property so that there is no shortfall between this and your outgoings. Note, if there are many properties available in the same area this could be inappropriate and you could lose tenants. They could move and so you would be in a worse situation than before.

2. Talk to your lender about changing your mortgage to interest-only..

3. Put your property on the market to release any equity and solve your financial situation. If you can sell privately this is even better as you would have to pay estate agents fees otherwise, and your profit would be larger.

If you have any questions after reading this article, then contact us by filling out the form on the Homepage or call us on: 0115 824 50 60
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