If you’ve been a mortgage seeker over the last few months, you may well have found your bank manager notably more willing to lend you money. The Governor of the Bank of England, Mark Carney, has stated that interest rates are likely to remain at their all-time-lows until 2016; and the government’s Funding for Lending scheme has increased mortgage availability and lowered rates. But how to cash in on this mini boom?
1. Buy to Let. If you have substantial equity in your home and wish to re-mortgage, or if you have funds saved, then this is an option. Growth in the rental sector and an unimpressive house building program mean rents remain high, and offer a solid return on investment. Beware the risks, however: running a property can be costly and you may make a loss when you sell. Many of our seasoned buy to let insurance customers will be well aware of these risks.
2. Buy your own home. You might decide to pay off your own mortgage as quickly as possible, keeping mortgage interest repayments down as much as you can. Again though, this is not a rock solid investment; you might not get the sum you expected if you do sell in the future.
3. Invest in residential property fund. There are some funds that let you invest in buy to lets at a distance; property management firms carry out all maintenance and tenant sourcing. Drawbacks: buying costs are high (especially with stamp duty), which may well mean management firms increase management fees to recoup their costs. You (and the management firm) may not be able to sell up when and if the time comes.
4. Invest in home building firms. Activity is picking up in house building, as the feel-good factor returns. Investing in a house building company may be a good way of cashing in on the boom. But for course, it depends how good the business acumen of the management team is, and no investment offers any certainty.
For more information about property let insurance please visit us on the main website.