What are the implications for buy-to-let landlords? The Monetary Policy Committee has announced...
What are the implications for buy-to-let landlords?
The Monetary Policy Committee has announced today November the 2nd 2017 that the Bank of England base rate has risen, the nine policymakers voted 7-2 in favour of reversing the quarter percentage point rate cut to 0.25 percent last August, with rising inflation being one of the strongest drivers for the increase, with the revelation in mid-October, that inflation has hit the 3% mark, amid efforts to try and keep inflation at 2%, this only intensified why a rise is imminent.
As a landlord with a buy-to-let mortgage or mortgages, you must be asking yourself what are the implications for me? With the interest rate being low for the last 10 years, we haven’t experienced the effects of what a rate rise will do, this will affect anyone applying for a new mortgage and existing mortgage borrowers who have not secured a fixed rate deal, ultimately monthly payments could go up.
If you have your mortgage on either a tracker rate or variable rate, the rate will automatically increase which could mean less profit in your pocket. With inflation already reducing what we have left in our pockets, the interest rate rise will not be greeted well and with no guarantee that the rate won’t rise further in the future too, it could be time to knuckle down your finances.
Historically while the base rate has been at its lowest for the last 7 years, the mortgage deals have helped to make home ownership a more affordable prospect, with lower repayment figures than prior generations had to meet.
However, some lenders had already foreseen the increase and begun creeping up their rates on residential and buy to let products already on the market, it’s not all doom and gloom though some have also dropped their rates. Now may be the best time to buy, with the exceptionally low rate, borrowing to buy property has never been so cheap, now may be the time to consider re-mortgaging and taking advantage of longer-term fixed rate product, in case these products become more expensive
How will you overcome this potential rise in monthly payments?
Will you increase the rents across your portfolio?
Will this be affordable for your tenants?
Can you increase your return on investment with a new strategy?
If you already have existing mortgages, now would be a good time to meet with one of our buy-to-let brokers and wealth management team.
CALL NOW to discuss further on 0208 658 9678