Money Spending

Buy To Let Mortgages. Boom Time Returns.

After last years crisis of confidence the buy-to-let market is again booming. Earlier worries that interest rates were on the up and property values would crash are firmly behind us. So now buying rental property should be easier than learning how to put backspin on a golf ball! So, fueled by rising rental yields confidence, landlords have been snapping up new properties and remortgaging for cheaper deals.

In the final three months of last year, rental incomes increased by an average of 3.3%. At the same time the rental yield, income as a percentage of the property’s value, edged up from 6.42% to 6.45%. The latest report from the Council of Mortgage Lenders (CML) also shows that the value of new buy-to-let mortgages increase by 47% in the second half of 2005 over the preceding six months whilst the number of these mortgages rose by 39%.

Indeed, we expect the boom to extend throughout 2006. It will be powered by the steady increases in house prices, a healthy demand from tenants, especially the first time buyers who remain priced out off the property ladder and a glut of cheaper buy to let deals.

Mortgage lenders are happy as well! Industry figures show that buy-to-let mortgages are now a safer bet for them than homeowner mortgages. According to the CML, percentage of arrears in buy-to-let mortgage is now lower than that for homeowner mortgages – and the arrears trend for buy-to-let is improving whist for homeowners it’s getting worse.

Not surprisingly, the mortgage lenders have responded by relaxing some of their lending criteria and aggressively promoting buy-to-let again.

In the past, buy-to-let lenders have required monthly rental income to exceed mortgage payments by 30% – so if a mortgage was costing £750 per month, the rental income needed to exceed £975. But now several lenders have relaxed this criteria. The reason’s not just the improved risk profile. Over the last six or seven years, house prices have risen faster than rental income yields, making it increasingly difficult for landlords to meet the +30% criteria. So now the lending average is closer to +25% although Northern Rock and a few others are happy to lend where the income simply equals the mortgage payment.

Simultaneously we have seen a trend for lenders to increase the percentage of the property’s value they will lend on. Whilst 75% used to be the maximum level, the average is now closer to 85% with Northern Rock lending up to 87% and GMAC being prepared to stretch to 89%.

Interest rates on buy-to-let have also fallen. 4.75% is available from the Mortgage Trust on a three-year fix whilst 4.79% is available from the West Bromwich Building Society fixed for a two years. Both these deals incur a 1.5% arrangement fee. On the West Bromwich deal, when you recalculate the interest rate and include the arrangement fee amortised over two years, the equivalent rate rise

s to 5.54%.

Arrangement fees should not necessarily be a problem for landlords whose prime concern is cash flow. For these landlords it can be worth paying a large fee to obtain a low headline interest rate. That’s because the rental income/mortgage payment calculation is based on the headline interest rate and this reduces the rental that has to be charged in order to meet the lenders income criteria.

If you’re interested in joining the buy-to-let boom, remember to do your homework. Carefully research the local rental market – look at the rentals being achieved, the trends in property prices and levels of vacant to let properties.

And be especially careful especially if you’re considering a city centre. Some lenders are becoming concerned at the potential oversupply of new flats and apartments in city centres they believe are becoming overpriced. Developers are responding by offering tempting cash back and discount schemes rather than reducing prices. But this can sometimes serves to mask the problem of over pricing. Realising this for some cities, lenders are reducing the value to lending ratio back to 75%.

Also remember that it’s important to budget for the inevitable periods when the property is empty. In an essentially demand and supply market, if the rental market in your area becomes oversupplied you could be hit by lengthy vacancies or be forced to reduce your rental prices.

Not surprisingly, the mortgage lenders have responded by relaxing some of their lending criteria and aggressively promoting buy-to-let again.

In the past, buy-to-let lenders have required monthly rental income to exceed mortgage payments by 30% – so if a mortgage was costing £750 per month, the rental income needed to exceed £975. But now several lenders have relaxed this criteria. The reason’s not just the improved risk profile. Over the last six or seven years, house prices have risen faster than rental income yields, making it increasingly difficult for landlords to meet the +30% criteria. So now the lending average is closer to +25% although Northern Rock and a few others are happy to lend where the income simply equals the mortgage payment.

Simultaneously we have seen a trend for lenders to increase the percentage of the property’s value they will lend on. Whilst 75% used to be the maximum level, the average is now closer to 85% with Northern Rock lending up to 87% and GMAC being prepared to stretch to 89%.

Interest rates on buy-to-let have also fallen. 4.75% is available from the Mortgage Trust on a three-year fix whilst 4.79% is available from the West Bromwich Building Society fixed for a two years. Both these deals incur a 1.5% arrangement fee. On the West Bromwich deal, when you recalculate the interest rate and include the arrangement fee amortised over two years, the equivalent rate rises to 5.54%.

Arrangement fees should not necessarily be a problem for landlords whose prime concern is cash flow. For these landlords it can be worth paying a large fee to obtain a low headline interest rate. That’s because the rental income/mortgage payment calculation is based on the headline interest rate and this reduces the rental that has to be charged in order to meet the lenders income criteria.

If you’re interested in joining the buy-to-let boom, remember to do your homework. Carefully research the local rental market – look at the rentals being achieved, the trends in property prices and levels of vacant to let properties.

And be especially careful especially if you’re considering a city centre. Some lenders are becoming concerned at the potential oversupply of new flats and apartments in city centres they believe are becoming overpriced. Developers are responding by offering tempting cash back and discount schemes rather than reducing prices. But this can sometimes serves to mask the problem of over pricing. Realising this for some cities, lenders are reducing the value to lending ratio back to 75%.

Also remember that it’s important to budget for the inevitable periods when the property is empty. In an essentially demand and supply market, if the rental market in your area becomes oversupplied you could be hit by lengthy vacancies or be forced to reduce your rental prices.

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Money Getting

Quiz- Do You Deserve Promotion?

So you think that you should be promoted. You are irritated also that why your promotion is getting delayed. You are working hard and doing your work satisfactorily. Why should you not get promoted? You want to ask your boss, but do not know how to ask? Can you we find out if you deserve to be promoted? If you are sure that you deserve promotion, you can approach your boss with surety and put forward your case. Let us quiz your promotion.

Quiz your working style are you working very satisfactorily in your present responsibility? Have you improved the efficiency? Are your colleagues happy with you? Is your immediate superior happy with your performance? Have you learnt all that any body could in your present job? Please quiz yourself about these factors.

Quiz your ability- what is your ability in different specializations that your organization may demand. You think that you deserve a promotion, but what about your ability for that responsibility? You are working well with the present job. Will you be able to do justice to the new responsibility or you were only equipped to do the present job?

A new responsibility demands new qualities. Do you have them? Or you will make a mess of that job? Unless you are yourself sure about your ability to handle the new posting, please do not approach your superiors for getting promotion. Once you are sure that you can handle the new responsibility well, go ahead. Sometimes, we invite trouble by getting promoted. Please avoid that.

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Money Keeping

Debt Consolidation Vs Bankruptcy

Debt consolidation refinance, is it good? And What Works Best For You

Many people in our modern society live from paycheck to paycheck. Most of them do not even see where the money they earn from a month long work goes a day after the payday. A lot of them are in deep financial trouble and are already in the brink of filing for bankruptcy. Is this what you really need or do you still want to get back your good financial standing? Debt consolidation refinance may be what you need.

Let’s learn a little about this type of refinance. First, one benefit you will gain from debt consolidation is that it may help eliminate harassment from creditors, which can give peace of mind. It may also help lower your overall payments and create one easy to manage monthly payment. If you take advantage of debt consolidation, it may help avoid your filing for bankruptcy. You may get back into good standing and re-gain credit worthiness.

You may need a debt consolidation when you feel that your monthly obligations to debtors become too difficult to manage.

If you are subject to huge and unrealistically high late payments charges and interest rates that make unreasonable demands on your finances, then this process may help you.

Debt consolidation refinance is also necessaryhen you start to notice that even after making your monthly payments your balance still remains the same.

If you own a home, you might be able to apply for a debt consolidation refinance against your home. Thus, you will only pay one creditor every month. You may also get a little relief and free up some cash by worrying only for payments of your newly structured consolidation debt. You may also be more diligent in paying your debt consolidation refinance when you know that you will loose the roof over your head if you miss on your payments to your debt consolidation refinance.

Finally, when in your assessment, a debt consolidation refinance is what you need; you may want to find a reputable and respectable debt consolidation company. Avoid loan sharks who will offer to help you in your debt consolidation refinance but will apply huge interest rates. They may give you stiff monthly payment terms and charge you double what other lending institution may charge for their services. This is not the debt consolidation company you want to deal with. If you can, find a non-profit debt consolidation company or lending institution that may give you the best options when you need a debt consolidation refinance. Only entrust your home to respectable and ethical lending institution to help you in the debt consolidation refinance.

Ensure you will not loose you home and will definitely keep back you credit standing. The smart choice in debt consolidation refinance may also help free up some cash and help you sleep not worrying for harassing calls from creditors.

Even when you find the non-profit lending institution for your debt consolidation refinance, you may need to scrutinize their offer. You may want to check the interest rates they recommend. Check also the length of the payment terms and the charges for their services. When you feel comfortable with the terms, only then can you sign a document sealing your agreement for a debt consolidation refinance.

It may also be a recommendation that if you have a regular eight to five job, you may ask the debt consolidation company for a little relief, may be you do not need to put your home as collateral. If they can arrange for your debt consolidations refinance without your home as collateral, maybe this is a neat deal.

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