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  • Summer Budget - Should buy to let mortgage holders panic | Mortgages for Business
    07 15 Written by Steve Olejnik Following George Osborne s bombshell for high rate tax landlords we have received a number of calls from landlords requesting advice For starters don t panic These changes do not come into effect until 2017 and even then reductions in tax relief for high rate tax payers will be phased until they come into effect fully in April 2020 Simon Whittaker our Finance Director has run some figures and worked up three comprehensive examples of how the restriction will affect landlords See examples here So Boy George is gradually removing the high rate tax relief on landlord s monthly mortgage interest As MD David Whittaker discusses on page three of the latest edition of FirstRate buy to let now represents c 18 of the mortgage market and with Mark Carney s comments that these levels may lead to financial instability it should not be a surprise that the Treasury would look to level the playing field between landlords and home owners My immediate reaction is that with a phased reduction and time to digest and consider the implications landlords should not make any knee jerk reactions Talk to your accountant take advice over the coming months and if you are a high rate tax payer review your property investment strategy One thing I am certain of is that more landlords will now look to set up limited companies through which to purchase buy to let property In addition to avoiding the reductions in personal benefits George Osborne s announcement that Corporation Tax will be cut to 18 by 2020 will inevitably increase the popularity of limited company buy to let mortgages Regular readers will know that at Mortgages for Business we specialise in arranging buy to let finance in the name of limited companies

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/july/summer-budget-should-buy-to-let-mortgage-holders-panic/ (2016-02-16)
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  • Summer Budget 2015 and the implications for landlords | Mortgages for Business
    approach Awards Testimonials Careers Contact us 0845 345 6788 Share News Insight Summer Budget 2015 and the implications for landlords 09 07 15 Written by David Whittaker What does George Osborne s Summer Budget mean for landlords with buy to let mortgages It s only fair to acknowledge that the Chancellor was right when he said the rise in buy to let is not necessarily good for the country s financial stability Buy to let loans accounted for 18 per cent of all mortgages in the first quarter of 2015 according to the CML up from an average of about 12 per cent There are no two ways about it given limited stock investors seeking decent returns are pricing first time buyers out of the market and tipping the scales against them The changes in buy to let mortgage interest relief from 2017 could help even the odds facing those trying to get a foot on the property ladder While some landlords may choose to leave the sector it is more likely that this will lead to an increase in landlords borrowing via limited companies where the interest can still be offset The fact that the Chancellor also announced that corporation tax will be reduced to 19 from 2017 and 18 from 2020 could be a further incentive to switch borrowing vehicle There s a further knock on effect buy to let products for limited companies cost more and there are fewer of them As demand increases lenders will have to step up which will require training underwriters to deal with these more complicated applications From April 2016 the wear and tear allowance which allows landlords to reduce the tax they pay regardless of whether they replace furnishings in their property will be replaced by a new system that only allows them to get tax relief when they replace furnishings We ll need to see how the policy allowing Housing Associations to sell off the social housing on their books will work in practice In the short term giving housing association tenants the right to buy is a sticking plaster solution to the UK s chronic housing shortage The policy is no substitute for building new homes It s the further planning reforms announced on Friday that will prove critical on that front But to look on the bright side the Budget didn t contain anything on rent controls And tenancy controls weren t in there either Both were mooted by Labour at the General Election It was widely expected that George Osborne would spurn price caps on rent but the idea of some state control over landlords proved popular for Labour on the election campaign trail and a few pundits were expecting the Chancellor to announce something in this area That George Osborne hasn t given in to that sort of pressure represents a victory for common sense in most of the places rent or tenancy controls have been applied New York for example they have failed miserably and

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/july/summer-budget-2015-and-the-implications-for-landlords/ (2016-02-16)
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  • How the restriction of relief on BTL mortgage interest will affect landlords | Mortgages for Business
    receiving a rent of 17 000 before letting and other costs of 2 000 and who has a mortgage of 180 000 with an interest cost of 9 000 Thus profit before rental interest is 15 000 and after interest it is 6 000 Note the proposed buy to let restriction relates to finance costs not just interest so lender application fees would appear to be covered by the proposals too Example 1 Mr A earns a salary or if self employed has a taxable profit of 25 000 His before and after situation is as follows Tax Current Rules Budget Proposals Tax Tax Salary 25 000 25 000 Taxable rental profit 6 000 15 000 Taxable income profit 31 000 40 000 Tax band Tax band Tax at 0 12 000 0 12 000 0 20 19 000 3 800 28 000 5 600 Less tax relief on interest 20 9 000 1 800 Total tax 3 800 3 800 In other words no change in the overall tax liability for this basic rate taxpayer If Mr A was an employee suffering PAYE on his salary he will have already paid 2 600 of PAYE leaving him 1 200 of tax to pay on his rental income i e 20 of his taxable rental profit of 6 000 Example 2 Miss B earns a salary of 75 000 Her position is altered as follows Tax Current Rules Budget Proposals Tax Tax Salary 75 000 75 000 Taxable rental profit 6 000 15 000 Taxable income profit 81 000 90 000 Tax band Tax band Tax at 0 12 000 0 12 000 0 20 38 000 7 600 38 000 7 600 40 31 000 12 400 40 000 16 000 Less tax relief on interest 20 9 000 1 800 Total tax 20 000 21 800 In this case her total tax bill has gone up by 1 800 due to the restriction on interest relief to 20 on 9 000 of interest expense so 9 000 x 40 20 She will have already paid 17 600 of PAYE and so the tax on her net rental income of 6 000 has effectively risen from 2 400 20 000 17 600 to 4 200 21 800 17 600 an effective tax rate of 70 on her net profit Example 3 Mrs C might hope that she is not affected by the change since her salary is 43 000 which together with her rental profit of 6 000 leaves her below the higher rate threshold of 50 000 But as the following example shows she does get caught by the restriction Tax Current Rules Budget Proposals Tax Tax Salary 43 000 43 000 Taxable rental profit 6 000 15 000 Taxable income profit 49 000 58 000 Tax band Tax band Tax at 0 12 000 0 12 000 0 20 37 000 7 400 38 000 7 600 40 0 0 8 000 3 200 Less tax relief

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/july/how-the-restriction-of-relief-on-btl-mortgage-interest-will-affect-landlords/ (2016-02-16)
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  • Yields slide as loan to value ratio cools | Mortgages for Business
    Bridging Short Term Finance Residential Mortgages About Meet the team Our approach Awards Testimonials Careers Contact us 0845 345 6788 Share News Insight Yields slide as loan to value ratio cools 08 07 15 Written by Jenny Barrett Average yields on rental properties have generally cooled according to our latest Complex Buy to Let Index Landlords owning semi commercial property SCP were the biggest losers Yields on such properties fell from 7 5 in Q1 2015 to 5 9 in Q2 2015 their lowest level in four quarters and a drop of 1 6 percentage points Similarly returns on houses in multiple occupation HMOs dropped 1 3 percentage points to 9 1 between the first and second quarter of 2015 Average yields for standard buy to let BTL property experienced a less marked decline dipping from 6 4 in Q1 2015 to 5 8 in Q2 2015 Owners of multi unit freehold blocks MUFB were the only winners in this quarter with average returns on rising 0 8 percentage points between Q1 and Q2 2015 to 7 1 However Q2 2015 s MUFB yield rate is still below the 8 6 and 9 3 returns which they enjoyed in Q3 2014 and Q4 2014 respectively Loan to value ratios plateau Average LTV rates for standard BTL and multi unit freehold blocks remained unchanged at 66 and 67 respectively between the first and second quarter of 2015 The LTV ratio for HMOs fell a percentage point over the quarter to 69 in Q2 2015 But the largest drop was in semi commercial property The average LTV ratio on SCPs fell from 65 to 54 over the first two quarters of this year a drop of 11 percentage points and the lowest LTV rate for four quarters David Whittaker managing director of Mortgages for Business comments LTV ratios and yield rates slid somewhat in Q2 While rental yields are still robust they seem to have lost the momentum they were gathering between the end of last year and the start of this one That said multi unit freehold blocks seem to have avoided the yield downturn demonstrating once again that complex property types typically produce higher yields The General Election campaign also impacted on LTV ratios With the pundits repeatedly predicting chaotic political horse trading after May 7th many lenders thought it best to not give too much too early They feared a change in the policy status quo that would hit BTL landlords and with it their ability to make mortgage repayments Larger proportion of HMO loans for remortgaging The proportion of HMO loans for remortgaging reached 90 in Q2 2015 The figure represents a 17 percentage point increase on Q1 2015 s percentage total and the largest proportion of any rental property type in four quarters Conversely the proportion of SCP loans for remortgaging fell between Q1 2015 and Q2 2015 The figure has dropped from 87 to 68 over the period a percentage point decrease of 19 and the

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/june/yields-slide-as-loan-to-value-ratio-cools/ (2016-02-16)
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  • Keystone launches New Classic Range with Landbay | Mortgages for Business
    Mortgages has launched its New Classic Range with funding from peer to peer lending platform Landbay The launch follows the announcement yesterday that Keystone s contract with Aldermore has ended after three successful years Commenting on the new funding line David Whittaker managing director of Keystone said When looking for a partner we were keen to work with a lender that is both forward thinking and innovative In a short space of time Landbay has built a very compelling underwriting capacity that provides the kind of rapid response and high quality service that are absolutely vital to Keystone s offering The first P2P lender to focus solely on buy to let Landbay s innovative approach is aligned to Keystone s lending ambitions The New Classic Range will appeal to brokers and landlords and we expect to lend 200m next year through this funding line The New Classic Range which replaces Keystone s core products formerly provided by Aldermore is more competitively priced with the added benefit of lower arrangement fees Pricing starts at 4 75 for a term tracker and 4 99 for a five year fixed rate The range is available to landlords looking for finance both personally and in a limited company capacity Key features include rates up to 80 LTV and products specifically for HMOs and multi unit property Landbay working closely with its servicer Paratus AMC will finance the Keystone products entirely with a 250 millionan institutional funding line David Whittaker added Landlords borrowing from the New Classic Range will also benefit from Landbay s innovative 100 Welcome Bonus which enables borrowers to become lenders When a landlord takes out a mortgage in the New Classic Range Landbay opens a lending account with a complimentary 100 for the landlord Commenting on the benefits of the Welcome

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/june/keystone-launches-new-classic-range-with-landbay/ (2016-02-16)
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  • Keystone’s buy to let contract with Aldermore ends | Mortgages for Business
    finance Auction Finance Residential mortgages Residential mortgages Rates Loans Fees How to apply Types of mortgage Residential Stamp Duty Calculator Research Case Studies Complex Buy to Let Index Buy to Let Mortgage Product Index Buy to Let Mortgage Costs Index Limited Company Buy to Let Index Property Investor Survey Money Markets FAQs FirstRate MFB TV Helping brokers with Buy to let mortgages Commercial mortgages Property development finance Bridging short term finance Case processing BrokerBusiness Case Studies Consulting Buy to Let Lending Mortgage Flow Published Research News Insight Buy to let mortgages Commercial Mortgages Property Development Finance Bridging Short Term Finance Residential Mortgages About Meet the team Our approach Awards Testimonials Careers Contact us 0845 345 6788 Share News Insight Keystone s buy to let contract with Aldermore ends 30 06 15 Written by Jenny Barrett Keystone s funding contract with Aldermore Bank has ended after a very successful three years originating close to 200m in loans Commenting on the announcement David Whittaker managing director of Mortgages for Business which owns the Keystone brand said It s been a really exciting venture which would not have been realised had it not been for the vision and determination of Rob Lankey former MD of the Commercial Mortgages division at Aldermore We are deeply grateful to him David Stiff and their colleagues for such commitment to the project Charles Haresnape MD Mortgages and Commercial Lending at Aldermore said We are grateful to David and his team for supporting us with the Keystone venture and wish them all the best for the future Loyalty Range funded by Aldermore From tomorrow a Loyalty Range funded by Aldermore will be offered exclusively to existing Keystone customers who are nearing the end of their initial rate Business as usual Keystone will continue to offer buy to let

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/june/keystone-s-buy-to-let-contract-with-aldermore-ends/ (2016-02-16)
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  • New Foundation product includes pay rate in rental calculation | Mortgages for Business
    Mortgage Product Index Buy to Let Mortgage Costs Index Limited Company Buy to Let Index Property Investor Survey Money Markets FAQs FirstRate MFB TV Helping brokers with Buy to let mortgages Commercial mortgages Property development finance Bridging short term finance Case processing BrokerBusiness Case Studies Consulting Buy to Let Lending Mortgage Flow Published Research News Insight Buy to let mortgages Commercial Mortgages Property Development Finance Bridging Short Term Finance Residential Mortgages About Meet the team Our approach Awards Testimonials Careers Contact us 0845 345 6788 Share News Insight New Foundation product includes pay rate in rental calculation 30 06 15 Written by Jenny Barrett Foundation Home Loans has launched a five year fixed rate buy to let product that uses the pay rate for rental calculations over the notional rate The lender believes that customers will benefit as a result while it provides more options for those considering investment in the buy to let market The new five product is priced at 4 39 per cent and the rental calculation will be determined based on that figure Other products in the range use a notional rate of 5 25 per cent highlighting the different between the two product options A new three year fixed rate product at a rate of 3 89 per cent has also been launched by Foundation as well as a variable rate deal priced at Libor plus 3 41 per cent The lender s two year fixed rate has been reduced by 30 basis points to 3 69 per cent as part of the recent batch of changes These changes provide buy to let landlords and investors will more options when assessing whether to expand or consolidate their existing property portfolios Paul Brett Business Development Director of Foundation said the decision to reduce rates and introduce

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/june/new-foundation-product-includes-pay-rate-in-rental-calculation/ (2016-02-16)
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  • Is buy to let being used to avoid financial regulations? | Mortgages for Business
    Published Research News Insight Buy to let mortgages Commercial Mortgages Property Development Finance Bridging Short Term Finance Residential Mortgages About Meet the team Our approach Awards Testimonials Careers Contact us 0845 345 6788 Share News Insight Is buy to let being used to avoid financial regulations 29 06 15 Written by Steve Olejnik Lenders could be using buy to let lending as a way to avoid new regulations it has been claimed The Bank of England Capital Economics has claimed that lenders could be using buy to let lending to avoid new regulations set It is suggested that buy to let is used as a way of getting around the loan to income cap introduced by the Financial Policy Committee last October The changes saw the FPC given the ability to control loan to income rations for mortgages for owner occupied deals It means lenders must limit loan volumes at or above 4 5 times the income to just 15 per cent of all new lending deals Access to funding The FPC a committee tasked with maintaining financial stability by the Bank of England altered the regulations in a bid to prevent borrowers from taking on too much debt Buy to let deals were not included under the regulatory changes although the FPC has asked for some level of control over the sector The latest figures suggest that buy to let lending has increased rapidly this year with Capital Finance suggesting that it is being used as an alternative means of accessing funding Buy to let accounted for 18 per cent of all lending in Q1 this year significantly higher than in past years where it accounted for between six and 13 4 per cent of all lending Property economist Matthew Pointon of Capital Economics suggests that the record share

    Original URL path: http://mortgagesforbusiness.co.uk/news-insight/2015/june/is-buy-to-let-being-used-to-avoid-financial-regulations/ (2016-02-16)
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