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 ** BREAKING NEWS ** - If you currently have a mortgage with Rooftop Mortgages, you will want to read this (you can thank me later)
I have just spoken to a client currently with Rooftop Mortgages that was offered a reduction in his loan of 15% to move to another lender - that is, in effect, writing-off £29,000 from his loan! This is the same situation we saw with Advantage, those of you lucky enough to have a loan with Rooftop can reap massive rewards by remortgaging. Call us for more details.
Interest Rate News - It seems almost trivial pointing out that interest rates were kept on hold last Thursday. What’s more incredible is that the base rate should have been reduced to 0.5% and kept at this level for the sixth consecutive month; it really brings home how fragile our economy still is.
There have even been calls for the rates to be cut to zero by some economists (that would really be good news for those of us on low base rate trackers). However, whilst rates are still low it is difficult to see how the market can gain the momentum it will need to sustain a recovery. Like many things, it is a balance, and we can we can only hope our friends between the Bank of England and the treasury (and their soon-to-be replacements) can tread the fine line without stifling the recovery.
Lender pledges new lending – recent data from the FSA reveal lenders have pledged a total on £38bn for new loans during Q2, which is £10bn more than was promised by lenders at the same time last year. Although that seems difficult to qualify, as in ‘what does that mean to me?’, we have already seen it working. Lenders like BM Solutions and Halifax have started to reduce their rates, and that is a direct response to them wanting greater market share.
When there is more appetite for lending, the process is normally the following:
Firstly they reduce rates; if that doesn’t raise enough new business, then they start to relax credit scoring, if that doesn’t work, then they’ll look to relax criteria.
Purchases not remortgages* – the desire for new lending in the current buy to let mortgage market is almost certainly geared towards purchases at the moment. There are a number reasons I believe this is the case. Political – Those lenders that are part-owned by the government are almost certainly being encouraged to kick-start the housing market with purchase products. Financial – The current pricing of buy to let products are mainly too high for anyone to consider switching from their low rate tracker.
*Although remember there are still some good reasons to remortgage. Capital raising, unencumbered properties and of course some lenders still have a high SVR, so you can save a great deal of money by switching, or see breaking news above!
TIP OF THE WEEK 1: Tax investigations – how to avoid (or evade) one.
He coming back for more: Stephen Fay ACA, our specialist property accountant, has come up with another fantastic tax tip. More tax investigations than ever are being launched, with landlords a specific target. Tax investigations can take years to resolve, result in huge tax bills (after adding penalties and interest to the underpaid tax) and cost thousands in accountant’s fees. Make sure your accountant is doing everything possible to reduce the chance of a tax investigation: Late tax business and personal tax returns suggests a disorganised or even fraudulent taxpayer – the taxman concludes you could be worth “looking at” – HMRC doesn’t like belligerent taxpayers! Tax returns are processed by a computer that carries out analytical checks on the figures to look for anything unusual. It is vital that your accountant spots these ‘unusual items’ for you and explains them – as this can satisfy a tax inspector and so prevent a tax investigation. If your rental income is above £15,000 per tax year, the taxman wants a breakdown of your expenses. Basic checks are then performed check if the figures look reasonable (especially given the new requirement for landlords to declare the number of rental properties they own). It’s important that expenses are categorised correctly between each expense heading to prevent a ‘red flag’.
But hang on in there … the taxman now has only one year after the date you file your tax return to launch an investigation into it (assuming fraud or negligence isn’t suspected). So, mark the date in your calendar- once it’s passed, you can relax!
(Please feel free to contact Stephen who is on hand to answer any more detailed questions – his email is
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TIP OF THE WEEK 2: Further advances
From this week, BM Solutions will no longer will allow further advances until you have owned the property for six months. So be prepared to wait 7 months before you can get your hands on the further advance cash, as you can’t actually apply until you have owned it for at least 6 months. Worth noting for future cash-flow.
As always, call one of our advisors today for more information 01424 205 373
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