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.

If you wish to arrange property finance on an interest-only basis you will probably find that the best rates are now available from private banks.

High-street lenders continued to tighten the criteria on their interest-only mortgages during June. The Lloyds Banking Group, which includes the Halifax, BM Solutions and Cheltenham & Gloucester brands, will no longer offer the option of interest-only repayments  if customers borrow over £500,000 or accept the future sale of a house or business as  a repayment vehicle on any interest-only loan.

“It is getting harder and harder on the high street to place interest-only deals above 75% loan-to-value,” said Nigel Bedford of Largemortgageloans.com. “Even below this, lenders are being more restrictive on what they will accept as a repayment vehicle and the documentation required to confirm it.”

Interest-only mortgages have grown in popularity among high net worth borrowers, with most loans over £1m being financed in this way.

Private banks will still want to agree a reasonable repayment method, but are less likely to ask for any particular proof because of their better understanding of how high income clients operate their finances.

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Latest developments in the mortgage market

There have been significant developments in the UK mortgage market in the last few weeks.     Now the General Election has been held and a stable Government formed, the mortgage market is showing signs of life.

• First time buyer? There are lots of lenders out there and not all need massive deposits – call us now
• Buy to let? New lenders have entered the Buy to Let market with an appetite to lend, giving hope to landlords looking to minimise their interest payments by remortgaging
• Looking for higher LTV? Then the new 85% LTV secured loans of up to £100,000 are now available for employed people, 75% LTV up to £60,000 for self-employed.
• Want a large interest only mortgage? With our private bank relationships, it is possible to obtain an interest only mortgage of £1 million plus, with no early repayment charges, up to 80% LTV
• Equity release? There are some great schemes available from the private banks to help you release funds from your property.
• Respected think tank, the Organisation for Economic Co-operation and Development (OECD) has stated that it would like to see the UK Bank Base Rate at 3.5% by the end of 2011, 3% higher than its current level. A fixed rate could give you peace of mind
• Need the lowest fixed monthly repayment? Then our rates with the Woolwich are very competitive

If you’re not sure what to do, just <http://www.largemortgageloans.co.uk/mortgage_quote.php?id=RU33> submit an enquiry, or call us on 020 7519 4900.