I have been talking of the need for landlords to build a 'landlords war chest' whilst interest rates remain low.
We have discussed the fact that 'cashflow' is the all important factor for landlords wanting to avoid repossession over the coming years.
As interest rates hit historic lows many landlords are seeing increased positive cashflow, but this won't last, landlords need to save this added income to supplement cash flow when interest rates increase again or alternatively start paying off their BTL mortgage loans.
Nick Hopkinson, Director of Property Portfolio Rescue, comments:"Landlords are experiencing falling demand and an increase in void periods, but those on tracker and variable rate deals have been given a reprieve by falling interest rates, and are enjoying a period of strong positive cash flow. Interest rates will not stay at this level indefinitely, however, and when borrowing costs increase again, as they undoubtedly will, investors will find themselves trapped and with insufficient equity remaining to remortgage.
"This ticking time bomb could prove disastrous. Cash flow presents the biggest risk in property investment and landlords must act now rather than be lulled into a false sense of security, in the hope that the market will bounce back. Wise investors will act cautiously over the coming months while rates remain low, taking advantage of a temporary boost in income to bolster their cash reserves. Interest-only mortgage borrowers might consider making overpayments to reduce their debt, increasing equity and improving their chances of qualifying for a good fixed rate deal when interest rates start to rise."
Read more in Mortgage Introducer
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