Monday, October 06, 2008
I used to love building sand castles. Spending hours building complex, fortified settlements on the beach. Patting vigorously with my little spade to make sure that all the walls were built soundly.
I would leave at the end of each day, knowing that my new construction would stand the test of time and would probably still be there long after I had left this earth.
I was only six! By the next morning too many other exciting things would of happened to me and I would forget all about checking on my building project of the previous day. Or maybe ( a bit like most kids and Christmas ) I knew that they wouldn't really last but put that harsh reality to the back of my mind.
We all soon discover that it's not ideal building on sand - it moves and shifts and however deep you go with the foundations, it's never quite deep enough. Buildings need rock solid stability.
The same goes for trying to finance property. Landlords and investors need stability. Landlords need time to plan, to avoid running into cash-flow difficulties.
Ive just been reading a blog post from a mortgage broker who was in the process of tying up a five year fixed rate buy-to-let purchase on a 75% loan to value mortgage with the Bank of Scotland for a client.
Whilst the landlord was signing the final paperwork for his new buy to let mortgage, the Bank of Scotland was sending the mortgage broker an email informing them the rate had been pulled with immediate effect and was no longer available.
All this wasted the landlord and broker time and left the poor landlord back at the drawing board.
Landlords face trying to build their property portfolio finances in a mortgage market that is changing constantly; where the products range are diminishing and the banking system is in turmoil?
My advice to landlords is give up and head to the beach.