Great News: The Money Centre is offering buy-to-let property landlords the opportunity to have their own exclusive free portfolio review. Subject to the level of gearing there is across your portfolio, the review will show you how to utilise the current mortgage deals on offer from The Money Centre's panel of lenders to allow you to expand your portfolio.
If you have just started in the buy-to-let market and are not sure how to go about buying your next property, or have bought as many properties as you think you can at this stage, you should take advantage of this free service. More often than not, re-financing can be better than selling. For example, if you bought an £100,000 property with an £85,000 mortgage five years ago, that property could have doubled in value over that time giving you the opportunity to double the mortgage and use the freed-up cash to purchase another property. By doing it this way you also delay paying Capital Gains Tax which you would have to if you sold the property.
The Money Centre will also provide guidance about safeguarding the cash-flow of your business. If this has not been taken into consideration already, it is important to make provisions for periods of little or no cash-flow like when decorating or renovating a property. To provide maximum cash-flow, it is common practise for landlords to structure their funding on an interest only basis - it is easier to make overpayments than it is to renegotiate the level of mortgage repayments in the event of a cash-flow shortfall.
Mark Alexander, Managing Director of The Money Centre, says: "As with any business, there are risks to buying property to let - tenants not paying their rent or damaging the property for example, alongside the rises in interest rates and falling property values, but the biggest risk of all is a lack of cash. When you have cash in the bank, all of the other risks can be dealt with as a set-back and irritation rather than as a disaster. Yet most associate risk with debt which means they are missing out on an enormous opportunity. Here at The Money Centre, we provide guidance on minimising risk and maximizing returns from property investment - essential advice for increasing your property portfolio."
"It is the norm for property landlords to borrow less than 50 per cent of the value of their property portfolio even though they could borrow up to 85 per cent of the value of the property, meaning that there is capacity to expand their portfolio. Basically, this means that if you were to borrow £10,000 you would have to pay £50 a month in interest at six per cent. In the eventuality of interest rates rising to, say, 10 per cent then the interest on £10,000 rises to £83.33 a month, but still, better to have the £10,000 in your bank with the £83.33 interest fee than not to have the £10,000 at all."
"For portfolio landlords wanting to scale up, let's talk about raising £1million. The interest on such an amount should, in theory, be £5,000 a month, whereas in actual fact, the cost would be the difference between the interest rate you pay, which could be fixed, and the interest you could receive on a high interest bearing current account. The difference between the two could be large especially when The Money Centre shops around for you and finds you the best possible deal, which is all part of The Money Centre's service. All this would put you in the position of having £1million in the bank and being virtually recession-proof if property values were to fall, which they most often do in a recession and you would be in a strong position to buy and take advantage of the new lower prices. All this and the reassurance that if the interest rates were to become too high you can reverse the position and repay the extra borrowings."
"As no one can definitely predict what will happen to property prices or interest rates and when, it is considered good practice to release equity whenever you can and make the most of the extra capital you have to increase your property portfolio. Another option which may be of benefit for you is to set up a Forward Buying Facility - a line of credit which could put you in the position of a cash buyer and enable you to negotiate discounts on new property purchases."
