Main site navigation:

June saw more mortgage lenders cutting their fixed rates after swap rates – which show the market’s expectations of future interest rates – fell.  Fixed rates are ideal for borrowers keen to protect against rate rises. But you might still be better off with a tracker rate.

With five-year mortgages as low as 3.99%, fixed rates have become more attractive to property owners because the gap between tracker rates and fixed rates has narrowed. Recent research shows that the  gap has fallen from 2.5% in March to 1.5% in June.

But you should always take advice based on your personal circumstances. Choosing a fixed rate might not work out cheapest for you. Trackers and discounted variable rates are still a cheaper option, at least in the initial months of the mortgage. And they will stay that way if the Bank Base Rate (BBR) stays at 0.5% for the next few years. However, the latest Monetary Policy Committee (MPC) minutes for June reveal that one of the MPC members voted to increase BBR because of fears that inflation is too high.

You might instead choose to hedge your bets with a combination of fixed and variable rates. Nigel Bedford of Largemortgageloans.com has a client who is looking to borrow £1.7m with 60% on a five-year fixed rate, which includes early repayment charges (ERCs), and 40% on a ERC-free variable rate.

“This gives him the best of both worlds: medium-term security with the five-year fix but total flexibility with the variable element, matching his plan to reduce the mortgage by £700,000 within the first five years or sooner,” explains Bedford.

Indicative rates for the loan are a variable rate of 2.7% – with an unlimited overpay and redraw facility – and a five-year fixed rate of 4.5%.

If this is something you might be interested in, call us today on 020 7519 4900 or request an online quote

The emergency Budget’s increase in CGT from 18% to 28% for higher-rate taxpayers was not as bad as had been feared. In fact it is a return to levels similar to pre 2008.

George Osborne announced that the new higher tax rate on capital gains would apply immediately from Wednesday June 23. Before the Budget, many had feared that a 40% rate would be introduced from April 2011 because the coalition government had let it be known that it would tax non-business assets at rates “similar” to income tax. But such a move might have caused a sell-off of second homes and buy-to-let properties, and consequential price falls.

So the increase in CGT to 28% is actually a relief as it does not significantly affect purchase or sale decisions. The argument in favour of property investment is still strong, as capital gains of 28% still compare very positively with income tax of 50%.

A number of estate agents had reported a spike in instructions to sell ahead of the emergency Budget, with some 150% above the levels seen in May 2009 (although the abolition of Home Information Packs may have also affected this figure). Other estate agents reported more second homeowners transferring property to companies which have lower capital gains tax liabilities. And the reduced rates of corporation tax – also announced in the emergency Budget this week – could encourage high earners to use corporate entities for tax planning reasons.

Whatever your finance needs when investing in property, Largemortgageloans.com has a team of buy to let mortgage specialists with access to the whole of the market, including private banks who are often more flexible in their terms and more competitive in their rates than the high street banks. Whether you are arranging your first buy to let mortgage or looking to finance your buy to let portfolio, we can find the best deal for you.

For access to the best rates on interest-only high value mortgages, contact us now on 020 7519 4900 or request an online quote.