The Bank of England has cut the UK’s key interest rate to just 0.1%, making it very clear that it really will do whatever it takes. If you’re a saver, look away now.
OK, you’re probably not losing much more of the vast amount of interest you are not currently being paid on your savings. Cutting the base rate to 0.1% from 0.25% does very little in practical terms.
Boris is embracing money printing even faster than you’d expect
As a statement of intent, you’re making it obvious that you really will do whatever it takes. Thing is, you need to back it up with some genuine action. And the Bank of England has most definitely done that.
But what does this mean for investors?
No sooner as the Election, Brexit & Christmas was out of the way, a surge of new investment money flooded the UK property market. The beginning of 2020 was an exciting time for investors.
Then two months later a new global challenge presented itself that has created a bigger, more exciting opportunity for investors that have the vision. Let me explain.
It’s clear that the Bank of England & the Government are as one on this.
Before the Bank of England’s key interest rate cut on 19th March 2020.
Property valued at £125,000, with a 75% loan to value (LTV), borrowing £93,500, you would expect to get around a 2% rate. Meaning that on an interest-only mortgage fixed for 2 years, the monthly repayments would be £155.84 per month.
But if you invest through a special purpose vehicle (SPV) or a limited company, then expect a rate of 0.5% higher than that.
With properties that Belcroft Investor Hub secure for their clients, the rental achievement can be as high as £695 per month, so their return on investment (ROI) looks very attractive indeed. Almost 15% just on rental achievement.
After the Bank of England’s key interest rate cut on 19th March 2020.
A property valued exactly the same, £125,000, although Belcroft Investor Hub’s sourcing team could be securing better prices from its vendors in the coming months.
With the same lending power against it £93,500, today Natwest is offering investors a rate of 0.79% fixed for 2 years, on an interest-only option. Meaning that your monthly mortgage repayments would be set at £62 per month.
The growth on the property alone could net £500 per month in 2 years.
That’s almost a saving of £1,200 a year on the same property with the same rental achievement attached. Now the same opportunity is rewarding over 18% ROI.
But how the Belcroft Investor Hub clients will really benefit is to take advantage of the huge growth spurt that city analysts are predicting after this madness has ended by remortgaging or selling the property when the 2-year fixed term has ended.
Many clients will organically grow their portfolios, but some will take that capital growth and run. What would you do with your profits?
If you’re in a position to take advantage of the market and can see the vision that my whale clients are focusing on.