Comments on: How Falling House Prices Increase Buy-to-Let Mortgage Risk http://www.findfinancialfreedom.com/30/how-falling-house-prices-increase-buy-to-let-mortgage-risk Your guide to getting yourself out of debt and out of the rat race Tue, 07 Sep 2010 09:10:47 +0000 http://wordpress.org/?v=2.5.1 By: Mark http://www.findfinancialfreedom.com/30/how-falling-house-prices-increase-buy-to-let-mortgage-risk#comment-546 Mark Sun, 08 Jun 2008 17:34:09 +0000 http://www.findfinancialfreedom.com/30/how-falling-house-prices-increase-buy-to-let-mortgage-risk#comment-546 Thanks for the comment Tristan, and I take your point about people buying property they couldn't really afford; it's a situation that the article covers implicitely, but doesn't really emphasise whereas it could (and probably should) have. I think the underlying problem is that BTL investing has been seen (by some) as something of a "free lunch" whereas, in reallity, it has its risks like any other investment opportunity! Thanks for the comment Tristan, and I take your point about people buying property they couldn’t really afford; it’s a situation that the article covers implicitely, but doesn’t really emphasise whereas it could (and probably should) have.

I think the underlying problem is that BTL investing has been seen (by some) as something of a “free lunch” whereas, in reallity, it has its risks like any other investment opportunity!

]]> By: Tristan http://www.findfinancialfreedom.com/30/how-falling-house-prices-increase-buy-to-let-mortgage-risk#comment-543 Tristan Fri, 06 Jun 2008 15:23:32 +0000 http://www.findfinancialfreedom.com/30/how-falling-house-prices-increase-buy-to-let-mortgage-risk#comment-543 Good article Mark, there are probably a few mortgage brokers that have advised clients to buy investment property that don't realise the risks themselves, let alone able to communicate them to their clients. I have a few clients that have BTL properties, I have always recommended that they look at three year deals, usually fixed, but in some instances (usually where the LTV is low) I've recommended they go for a tracker, having explained the risks of course. An interesting point that I'm not sure you really emphasized in the article, is that some novice BTL investors bought properties that they couldn't really afford, on 1 year mortgage deals, hoping that the property value would rise over the following 12 months and then enable them to re-mortgage onto a better deal as the LTV would have decreased...in theory. I actually had an enquiry like this recently, and after doing my research, I wasn't able to find the prospective client a mortgage, as the property had in fact fallen significantly in value. So they now have a property worth less than they bought it for, costing more in interest each month than they receive in rent, not the best investment all round really. Good article Mark, there are probably a few mortgage brokers that have advised clients to buy investment property that don’t realise the risks themselves, let alone able to communicate them to their clients.

I have a few clients that have BTL properties, I have always recommended that they look at three year deals, usually fixed, but in some instances (usually where the LTV is low) I’ve recommended they go for a tracker, having explained the risks of course.

An interesting point that I’m not sure you really emphasized in the article, is that some novice BTL investors bought properties that they couldn’t really afford, on 1 year mortgage deals, hoping that the property value would rise over the following 12 months and then enable them to re-mortgage onto a better deal as the LTV would have decreased…in theory.

I actually had an enquiry like this recently, and after doing my research, I wasn’t able to find the prospective client a mortgage, as the property had in fact fallen significantly in value. So they now have a property worth less than they bought it for, costing more in interest each month than they receive in rent, not the best investment all round really.

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