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The Property Club Timebomb!

If you're a Buy-to-let Landlord that purchased new build or off-plan property over the last few years from a club that no longer exists (as I did three times over!) then you need to consider what RentLadder.com can offer you.

The problem is that most of this property was purchased when the Loan to Value on properties were at 85%, what this means is that the lender offered you £85,000 to purchase your £100,000 property.

For those who are coming off their fixed term mortgages now your rates are low and the cash flow on these properties is strong as the rent more than covers the mortgage payments which provides the breathing space given that the prices haven't increased over the last few years.

The plan was that once the properties have increased in value we would all be able to remortgage at 85% of the new increased value. The problems here are that the value hasn't increased and the 85% products are no longer available or expected back any time soon. Additionally lenders are enforcing conditions such as your rent must exceed the mortgage payments by 120-130% and we've seen cases where they say that coverage must be against a higher rate (7.49% for example when the actual interest you're being charged is 5.49%)

Where does this leave you?

• You can sell at a discount in the current market, not ideal.
• Dig into your pocket and make up the difference - for example let's say the value of your property has held it's own and is still at your purchase price of 100k. You would need to find an extra 15% to make up the LTV of 70% which is the pecentage of a majority of the current products. So an extra £15,000 for every £100,000 property.
• You can leave the property on the Standard Variable Rate (SVR) however as the rate increase over 2010 your profit will reduce and you will be running cash flow negative again.
• We can take and agree the price today thus taking the problem off your hands on terms that work for you, before it starts costing you money.

Please don't leave this too late - the problem isn't going to go away whether you choose to work with us or not this is somthing that you need to be thinking about today.

Footnote.
There are some Property Clubs that will work with you to avoid this happening that we're happy to recommend - we get nothing from such recommendations other than we like working with companies that share a strong ethical background. Please contact us for details.