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Is buy-to-let mortgage a good idea?

22/05/2009


House prices are decreasing every quarter and mortgages are becoming difficult to obtain; who would want to be a buy-to-let landlord in the credit crunch?

The drop in house prices has made yields attractive since 2005 but it is still said that buy to let is a headache for the average investor.

Homeowners were relying on the capital appreciation. A vast majority of buy to let investors did not understand what was involved and decided to invest because others choose to.

The buy to let mortgage sector has decreased over the past two years with 95 per cent of deals disappearing from the market place, Gilbert a member from the moneysupermarket.com group suggested that landlords needed at least 20-25 per cent deposit to remortgage. He also explained that switching to a tracker deal could give people a chance to take advantage of low interest rates.

Depending on the type of the mortgage and size, anything from 0.5 per cent to 3.25 per cent of the loan, simply means that remortgaging is not always a good idea. A vast majority of landlords have found out that reverting to the lender’s standard variable rate is the best option.


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