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Can’t Afford Your Buy-to-Let Mortgage?

An unaffordable investment property can put a major strain on your finances. Find out how to get rid of unwanted properties, without the consequences.

There are several reasons why any buy-to-let property investment can go wrong. By its very nature developments are a high-risk, high-reward business.

In today’s ever-changing climate, with the backdrop of Covid-19 and now inflationary pressure increasing costs, it is exceedingly difficult to predict anything with confidence and things can invariably go wrong.

Is Your Buy-to-let Investment Making A Loss?

As mentioned, generally buy-to-let and investment properties are not an issue until the costs outweigh the return. For rental properties, the income should usually be at least 125% of the mortgage costs. Due to recent interest rate increases, this margin has decreased for many landlords.

Whilst investors with large portfolios can cover these losses, the small-scale investor, often with only a few properties, cannot keep up. Especially if you are trying to balance other mortgages at the same time.

If you fall into arrears or default on a mortgage, your lender will repossess the properties. At this point, you will be asked to pay the difference between the sale value and the remaining mortgage. Whilst this may not seem like a large amount, lenders will sell repossessed properties at reduced prices so, the difference will be larger than if you sell on the open market.

Time To Sell Your Buy-to-let Property?

The easiest way to resolve any issues would be to sell the property and pay off the mortgage. If your property has increased in value, this is a viable strategy. However, if the property has decreased in value, the sale value will not cover the mortgage.

If you only have one property, this may be manageable. However, if you own multiple negative equity properties, you may have to pay a considerable amount.

Further to this, you will need to provide at least 6 months’ notice if you have tenants in a property. This can further complicate a sale and, means you may have to continue to lose money during this period. This potential delay is why it is always best to explore your options early on, as in the long term, you will get a better outcome.

Sam Howell

Debt Solutions Team Manager

Having known Bell & company for over ten…

Having known Bell & Company for over ten years now I can safely say they have never failed to deliver. Fast efficient and friendly service.

Having known Bell & company for over ten…

Having known Bell & Company for over ten years now I can safely say they have never failed to deliver. Fast efficient and friendly service.

Frank Dunne – GB

Other Options?

If you can’t afford to sell your property on the open market, you can voluntarily surrender the property.  This process involves the repossession and forces the sale of your property by your lender.

The money from the sale is used to pay off the mortgage and you will receive anything left after this sale. Generally, the lender will force the sale at below market price. But, if you cannot pay the mortgage, do not have the funds to pay the shortfall or cannot find a buyer, this is an alternative route.

Doing this by yourself can lead to various consequences which is why we always recommend speaking to experienced property debt specialists. Bell & Company have helped thousands of buy-to-let and investment property owners since 2008. If you find yourself in this situation don’t hesitate to reach out to us today.

Take advantage of our offer for a free initial case review, where our team of experts will analyse your situation and provide tailored guidance to help you navigate your way out of property debt. Don’t miss this opportunity to gain valuable insights and explore potential solutions to achieve your property investment goals. Contact us to get started.

Contact us today to speak to a debt specialist.

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