The Bank of England has been indicating recently that UK
interest rates will be going up in the not too distant future. Therefore, if
you are one of the 2,476 homeowners in Penicuik, who own your own home with a
mortgage, then you need to consider your options and start to budget for an
interest rate rise. However, if you are a landlord, who owns one of the 530
rental properties in the town, whilst your exposure to interest rate rises is
lower, it is most certainly something you should be aware of.
Since the spring of 2009, British interest rates have
been at a record low of 0.5%. It’s not a case of if, but when, they will rise.
Some people think it will be before Christmas, although I am of the opinion, it
will early in the New Year around Easter time, when they do rise. I also expect
those rises will be slow, steady and limited. It depends on what is happens to
UK wage rises, UK inflation and the general state of the British economy.
Nevertheless, as much most of us in Penicuik would love to pull the shutters
and stick two fingers up to the world, we have to recognise we are part of a
global economy and global economic worries still exist to prevent an abrupt and
instantaneous rate rise.
Those Penicuik landlords, who do have a mortgage, need to
realise that as interest rates rise, their monthly mortgage costs rise. It’s
easy to say you will look at your mortgage next month, then before you know it,
Christmas will be here! Don’t forget,
mortgage lenders have always removed the juicy low rate mortgage deals a few
months before interest rate rise. Speak to a qualified mortgage arranger, there
are lots of them around and seriously consider fixing your mortgage rate
now. You didn’t buy your Penicuik buy to
let property for it to become a millstone around your neck. It’s all about
mitigating your costs and maximising your income to make your Penicuik buy to
let property the investment you want it to be.
However, on the other side of the coin, two in three
landlords who have bought property since 2007, have done so without a mortgage.
A rise in interest rates might be a good thing. Let me give you some background
first, then I’ll explain why. Penicuik landlords have see their return on
investment for their Penicuik buy to let property, over the last couple of
years, perform very well indeed with Penicuik property values rising by 21.49%
since the Spring of 2009. However, when rates do rise, whilst more expensive
mortgage rates will ease the demand for borrowing, on the other hand, it may
temper house price growth, making the property market more competitive... and
therefore, we should see the return of some bargain property buys in Penicuik!
Finally though, can I ask all Penicuik homeowners and
Penicuik landlords, who have a mortgage that isn’t fixed, they need to
recognise that rates will rise throughout 2016 to 2018 and will continue to
move steadily upwards towards more viable and feasible long term levels. I am not qualified to give that advice and
this is my personal opinion, so please speak to a qualified mortgage arranger
and, if appropriate, fix your mortgage before interest rates rise. Don’t say I
didn’t warn you!
In the meantime, if you are a landlord looking for a
bargain now, don’t despair ... there are plenty out there, if you know where to
look! One place is Rightmove, another Zoopla and another OnTheMarket. However,
sometimes, you can’t see the wood for the trees. At the time of writing, the
ESPC had over 60 properties for sale in
Penicuik, Rightmove 50 plus properties
for sale in the town and Zoopla around 45
properties ... where do you start?
I can help you here! If you see a property that may be of
interest, please email the link to me robert@thekeyplace.co.uk
or linda@thekeyplace.co.uk and
we will give you my opinion on its suitability as a buy to let investment.
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