Mortgages Uncovered

As house prices have risen dramatically over the last few years, so many people decided to jump on the bandwagon and buy an extra house to rent out… or even two or three extra houses.  For those who got in early enough, they made a mint, but is it still a good time to do it?

According to the Council of Mortgage Lenders (CML), buy-to-let mortgage lending rose sharply again in the last six months of 2007.  However, there is no information as to whether these are people buying their first ‘second house’ or whether it is cash-rich existing landlords extending their portfolio.

As with all property, it should be a long term investment anyway but in recent years, people have been thinking of property as a way to make a quick buck through buying a property, renting it for as little as a year and then they’ve been able to sell at a profit straight away.

With the fears of a market price drop or at best a stabilisation, I think most people should steer clear of the buy-to-let market unless they have a significant deposit to protect themselves against the possibility of negative equity.