I have read something very interesting.  The FSA is going to stop mortgage lenders profiting from arrears.  So I am going to put 2 and 2 together and hopefully come up with 4!:

 

1. Lenders cannot profit from arrears
2. Lenders cannot reposses within 6 months

 

I call that a free overdraft!

 

It will mean you can get in arrears up to 6 months and there is nothing the lender can do.  Yes they can:

 

1. Send you arrears letters
2. Damage your credit file
3. Call you in for a meeting

 

But they cannot charge you heavy arrears charges or take the property off you.  Not unless you get in to 6 months in arrears.

 

Now this should not be your intention!  However what the FSA will do if the regulation goes ahead will mean there is a cushion for us investors.  So on one hand the regulation will slow us down on the other hand we will be more protected.  NICE!

 

So if you possess some buy to let mortgages HOLD ON TO THEM!  i.e. do not sell.  You will soon have a regulated mortgage where pretty much all the problems fall on to the lender.  The lender has to deal with the regulation not you.

 

It will change the buy to let products we will get as the innovation will soon disappear from these products because of the restraints put on to the lender.  We may go back to the good old battle of rates. i.e. not gimmicks, just a battle of who can offer the lowest rates.

 

Also protection is growing for tenants against landlords who are at the mercy of lenders.  This pressure being applied ultimately puts us landlords in a better position.  Lenders should help landlords who in turn keep the tenant’s tenancy secure and certain.

 

So it is not all bad news.  In fact, on the whole, its GREAT news!

 

Ajay

 

 

Posted on: 22nd Oct 2009