Any of you budding rockerfellers brought a BTL in the last couple of years with just 20% down (financed by your credit card if you believe the hype on here)? Prepare to find some spare cash to top up the equity as prices fall, or be forced to sell. But its me pension init!
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http://www.telegraph.co.uk/money/mai...ortgage114.xml
Buy-to-let landlords will have to raid their savings and inject extra capital into their homes, under an obscure clause in their mortgage contracts, if house prices continue to fall.
buy-to-let mortgage providers, require customers to top up their initial deposits if falling house prices mean the size of their mortgage rises above 85pc of the value of the home.
In a decade of rising house prices, the clause has been largely irrelevant but analysts are concerned that it may now convince landlords, who are already facing higher mortgage costs, to sell large chunks of their portfolios.
Under the terms of the contract, if a £100,000 home with an £85,000 mortgage falls in value by 10pc the landlord has to find another £8,500 to maintain the lender's maximum 85pc loan-to-value rate - even though there is still £5,000 of equity in the property.
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In a decade of rising house prices, the clause has been largely irrelevant but analysts are concerned that it may now convince landlords, who are already facing higher mortgage costs, to sell large chunks of their portfolios.
Under the terms of the contract, if a £100,000 home with an £85,000 mortgage falls in value by 10pc the landlord has to find another £8,500 to maintain the lender's maximum 85pc loan-to-value rate - even though there is still £5,000 of equity in the property.
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