Mortgage Slump Could go on for 3 Years

Houses for sale but buyers can’t get mortgages

People looking to purchase a home were faced with more gloomy news recently, when some forecasters are predicting that the mortgage crisis could last for up to three years.

It’s certainly clear from the Bank of England figures that mortgage approvals dipped dramatically by almost 70 per cent in June to a record low. The figures are that only 36,000 new mortages were arranged for people moving house. And the overall net mortgage amount plunged to only £3.1 billion.

So people are still looking to get finance approval for buying a new property; it’s just that mortage lenders are being much more cautious about who they lend money to in the current economic climate.

A Government report indicated that there might not be a quick fix to remedy the home loan doldrums. Although to be frank, when did the government ever come up with a quick fix for anything?

Any offer of help from the government to ease the securities market quickly evaporated when the credit crunch hit. The banks and building societies are now waiting for the follow-up report to be published in the autumn for a clear way forward. And this has caused a backlash, because the mortgage lenders are calling for some decisive action to resolve the current mortgage crisis.

Property Prices Fall, Deposits Keep Going Up

So in spite of falling property prices, mortgage lenders continue to tighten their lending conditions. And the average deposit a home-buyer will need to buy a property keeps rising. In some parts of the country, deposits of 20% are being requested for purchasers to qualify for a home-loan.

A recent Hometrack survey found that the average property sale is going through at roughly 10 per cent below the asking price. Which is not good if you’re a seller looking to move up the property ladder. But - if you’re an investor looking to make the best of a bad situation, and you have some cash liquidity, you could move into this market in a very strong position. And one thing the ‘experts’ all seem to agree on, is that this situation is likely to last at least 3 years, before it moves back to more realistic levels.

If you’re looking to move into this property market, it might be wise to get some sound advice from someone who is familiar with the current property market, and can help steer you through the potential ups and downs.

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Rent Your Home to Solve Housing Worries

Want to move, but trapped by the credit crunch?

Renting out your home may be an interesting solution to investigate, if you want to keep moving up the property ladder. And it’s not a crazy as it might sound at first…

Currently we’ve got a property market with low property sales, but high rental prices. Which make a good combination for shrewd investors. This could be a perfect way of side-stepping the market log-jam and moving on - rent out your current home; let the tenants cover the mortage; and buy again.

If you bought your property more than 4 or 5 years ago, it’s likely that the rent you could earn on your home could more than cover your monthly mortgage costs, because rents are currently high. At the same time, property prices are dropping, so it makes no sense to sell your property at the moment. Unless you’re willing to risk the capital appreciation that might have accrued up till late last year.

A recent letting report from RICS shows new instructions at letting agents are at an all-time high; and estate agents noting an increase in new landlords letting their own homes.

How to Capitalise on the Rental Market

Here are a few things to consider before you become a landlord:

Firstly, you need to understand your market. If you’ve got a three-bedroom house, well-maintained and well-located for schools, you’re in a good postion for a family or corporate let. If, on the other hand, it needs some tidying up and it’s not to such a high standard, then you’re better offering it to a younger family or flat-sharing.

Speak to local estate agents, who would know your area , and know what kind of rental prices your property could realistically achieve.

Don’t go out and buy furniture for tenants. It’s likely they have their own. But if someone does come along who wants to rent it furnished, then be prepared for a small outlay. Be flexible in other ways – if you don’t have a power-shower, but a prospective tenant says he’ll commit for a year if you install one, consider it might be worth spending the £300 to secure them.

If a tenant is willing to commit, but at a slightly lower rate than you’ve set, again consider if it makes sense to let your property out at the lower price, rather than run the risk of going a full month without any income. If you’ve got several prospective tenants, this won’t be an issue.

A few more things to consider before renting out your property.

You’ll probably need to convert your existing residential mortgage into a buy-to-let mortgage. At the very least, check the terms of your mortgage, and place a call to your mortgage company to let them know your intentions to rent out your property.

You’ll probably need at least a 10% deposit saved up to place as a deposit on your new property since it’s hard, if not impossible, to find 100% or even 95% mortgages any more.

What’s the Downside?

You’ll need a legally binding contract drawn up. Although a bit of searching on the web will turn up numerous law firms who specialise in downloadable legal documents - including short-term assured tenancy agreements.

Recognise or find out your legal responsibilities - in terms of the safety of your home. Particularly things like gas appliances that require annual inspections and certification by a Corgi-approved technician. If you do let your property out furnished, or partially-furnished, the furniture must meet or exceed any current fire regulations; and any electrical appliances must be checked for safety.

In your calculations, you need to factor in any costs you might have to cover when the tenants leave - from a little bit of re-decorating, to repairing fixtures and fittings, to replacing carpets.

Understand thaere is a lot of uncertainty in the market. There seems to be a glut in tenants right now; with rental prices very high. As teh property market stabilises, this could change, meaning a drop in possible rental incomes, or less tenants looking to rent your property. So you need to consider your possibilites and ability to cover tow mortages for a few months if need be.

What’s your first step?

Talk to someone who has done this. Or someone who can really help and guide you through all the different things you need to consider. After all, it’s a bit more than just decorating your house in a neutral shade throughout.

There are a number of property investment seminars that are held throughout the UK, which you could attend to hear more about becoming a landlord, and to ask questions - to see if this could be a viable way for you to move up the property ladder.

Find Out if You Would Benefit from a Free Property Investment Seminar

Falling House Prices - Still a time to Profit

How Can You Profit From Property?

House prices are falling - as if you didn’t already know! But they haven’t fallen so fast for 18 years. The average house price has dropped a shade over 10% since this time last year. And according to Nationwide, the fall in house prices is actually accelerating. June saw a 0.9% fall; July fell by 1.5% and August saw a fall of 1.5%.

So is there still a means or a mechanism by which to profit in these uncertain times?

The housing market hasn’t looked so grim since 1990. But look at the peaks and profits we’ve had since then…

If you look historically, the property market has increased in value over the longer term. Of course there have been ups and downs in the market, but over the longer term, property has remained a pretty safe bet.

And as several estate agents are reporting, some interest is returning to the property markets, with a slight increase in viewings. Although they also say that the increased viewings have not necessarily yet translated into increased buyings.

So there is still a degree of caution across the different property and housing market sectors. Most experts agree that people are waiting to see how far (or how much further) the house prices are going to fall, before making any commitments.

The average house price, again according to Nationwide, is now £15,000 cheaper than a year ago.

On the other side of the coin, a number of mortgage lenders have announced they are going to cut the cost of fixed-rate mortgages, to encourage buyers to take action in the housing market.

So is there a way to profit from all this?

What’s the best way to buy into the property market and find your niche within property investment?
What’s the best way of finding your way around in this current market uncertainty?

One of the best ways is to get some expert advice. From someone - or a team of people - that have been through the ups and down of property investment and can guide you through the pitfalls, so you can learn firsthand from their mistakes.

Property Mentor is one such team. They are offering a free property investment seminar in different locations around the UK. Click here to find a location near you.

Find Out if You Could Benefit From a Free Property Investment Seminar

Solving the Property Investment Puzzle

Fitting Together the Pieces of the Property Puzzle

With all the different opinions on property investment, house prices, inflation, recession, and what’s going to happen with the property market, it makes it difficult to work out a viable strategy to profit from property investment.

Even though house prices may be falling in most regions, the rise in rents since April has kept many landlords in the game - and in profit - particularly since the rise in rents has helped increase their gross yields.

RICS spokesperson James Scott-Lee said:

“The lettings market is booming with many vendors opting to rent their property while sales in the housing market continue to dry up… Becoming a landlord is now an increasingly profitable option with rising rents and yields offering good returns.”

It seems that established and savvy investors have been reaping the benefits of the housing downturn for some time now, and will probably continue to do so.

But there are still quite a few hurdles to cross, before you can be certain of turning a profit in these uncertain times. Many people may be reluctant to enter the market right now, which could be a blessing for those with the foresight to profit from property, buying low and either renting or simply waiting for the markets to turn once again.

Register For A Free Property Investment Seminar In Your Area

Students Still a Good Bet?

There are certain areas that tend to remain buoyant, despite other market forces at work. These are cities where a lot of re-generation is taking place, and top student and university towns. As far as property investment from rentals, it seems that places such as Nottingham, Durham, Bangor, Manchester & Hull remain well above average, with yields far better than other areas of the country.

Although many investors may think that this is a weak property market at the moment, research is showing rental yields are on the up, and buy-to-let investors have an interesting opportunity to take advantage of the increasing demand for student accommodation, whilst capitalising on the lower house prices.

As Nick Clark, Managing Director of the Property Investor Show said recently:

“There will always be a sustained demand for properties which will produce a far greater annual rental yield than the average buy-to let property. In fact, it could be as much as six to seven per cent more.”

Find Out if You Could Benefit From a Free Property Investment Seminar

Property Investment

Property - A Safe Bet?

Investing in property even in times of economic downturn is and always will be a wise investment of your time and money.

However the wisest investment of all, is the ability to invest just your time. My Property Investment can teach you how to profit from the property market without using any of your own money. All that’s required is your time.

The property market enjoys peaks and troughs just like any other investment opportunity - the wise investor can benefit from a negative property market possibly more so than a buoyant one.

If the idea of profiting from the housing or property market appeals, whatever the market conditions, then read on »