Property Investment UK
In the current UK Credit Crunch, property investment may not seem to be high on many investors agendas, but this could be a mistake as the current financial situation is a perfect opportunity for investing in property.
The buy to let market in the
The main reason behind this discrepancy in supply and demand is the prevailing attitude in the property market of 'wait and see'. Many first time buyers and property investors believe that property prices may yet have further to fall and so are delaying buying any property.
This creates a perfect opportunity for anyone willing to commit to long-term prosperity to step into property investment. Even in the dark days of the late 1980s when property values fell massively, at no time did property become entirely worthless as an investment. Rental incomes remained steady during that financial crisis and indeed demand for rental properties increased, as it is predicted it will do again in the next few years.
In the 1980s a mortgage to buy an investment residential property was virtually impossible to obtain. The problem was simply that mortgage lenders applied the same lending criteria to both a mortgage to fund the purchase of a main residence and a mortgage to buy a property for rental. Not many would-be property investors had an income sufficient to qualify for a mortgage on two houses under these criteria. The amount of rental income that could be obtained from the purchase was not taken into account by the lender. So the borrower was expected to pay the mortgage repayments entirely from his earned income.
The advent of the Buy to Let Mortgage in the 1990s revolutionised the property investment ability of the average person. Now it was possible to borrow based on the potential rental income of the property. This is still the case. It is only necessary for the borrower to find a deposit of 10%-25% of the purchase price (depending on the lender) and for the anticipated rent to be higher than the interest payments on the mortgage by about 25%-30%.
With interest rates on savings accounts at an all-time low,
investing in the
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Comments
I still believe to buy to let mortgage is a great way to invest your money; at the end of the day you will have a property paid by the tenants; the trick to reduce tax is to put the minimum deposit and once you declare taxes to HMRC you can always deduct it from the total profits.
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