The new mortgage lending criteria as set out by the Prudential Regulation Authority are now in play as of last weekend, any buy to let property investor will have to prove that they can afford any new lending by showing the entire income of their property portfolio.
For those who could be struggling financially through over exposure, poor rental income, inconsistent rental income and high interest mortgage deals this is not good news.
If any of these portfolio investors are one step from the edge and their property portfolio is at risk, they could well find themselves turning too equity release to bridge the financial gap, according to new research from Retirement Advantage.
Investment into property is favored my many investors looking to save for their retirement as it can give both regular income and sizable capital growth, both come in extremely handy either when saving for retirement or when you become a retiree.
No property investor or any investor for that matter wants to dip into their retirement nest egg early as this can have drastic consequences later down the line, but for anyone at risk of losing their property portfolio this maybe the only solution that they have left.
If you have had your property portfolio for any length of time and have built up considerable capital growth you will do whatever is necessary to hold onto it, so equity release could be a financially viable option.
There are many equity release providers out there that offer products for owners of investment properties that allow investors to release cash from their portfolio tax-free while leaving their entire portfolio intact.
There are according to recent figures a large number of people who mortgaged their investment properties with a SVR mortgage who are finding it increasingly difficult to keep up with the payments already, so interest rates rise anytime soon they could be at risk of losing it all.
In September, a report issued by Nationwide claimed that’s as many as one in five landlords could bow out of the market due to the nature of the more challenging buy-to-let climate.
Alice Watson, head of marketing at Retirement Advantage, said: “As with other property owners, buy-to-let landlords want flexibility when it comes to financing options. Equity release is now a viable route.
“By launching products specifically for buy-to-let landlords this summer, it gives these individuals greater opportunity to use their property wealth to support their retirement.”
I would never advocate people going down the route of equity release with their investment properties, but neither would I advocate losing your portfolio entirely if there are options left on the table, so if you find yourself as a property investor left with no other choice then so be it.
My advice would be to always get independent professional advice before signing on the dotted line, this nothing against the equity release companies themselves when it comes to a financial decision like one such as this, a second opinion and the right advice is paramount.
Any investor through no fault of their own could find themselves in a situation like the one we just described, unable to meet the payments on their investment properties, but to do your utmost to guard against means diversifying your investments.
That can be in different asset classes entirely or just expanding the types of property investments within your portfolio. No matter the route you decided to take, that’s entirely a personal preference and will depend on a whole host of reasons from risk appetite, investment goals, timeline to name but a few, the most important point is to diversify before it is to late.
For more property investment news, advice and opportunities call DevDosh Ltd today on tel: +44 (0) 20 7193 7797 and let us explain how you can make 10% annual returns with little to no risk or visit us at www.devdosh.com