Many of the public have lost confidence in some of the pension plans offered by their firms and the Daily Mirror fiasco was possibly the start of all this unrest. It came to light that Robert Maxwell, chairman of the Mirror Group, had been siphoning off funds from the workers pension fund for his own personal use. This was only realised when Maxwell had died (rumoured to be suicide), when he was discovered to be missing off his boat. This resulted in many of the workers at the Mirror Group losing out on their pensions, some of whom had contributed for over 30 years. This incident also had an impact on those who had taken out a personal pension plan as a company pension was not available everyone.
During the last few years the terms of many company pension plans have altered so that those in company schemes have no idea what pension they will receive. In the past an employee working for 40 years and in a company pension would receive two thirds of their final salary so someone earning ?30K would retire on ?20K. However this has proved too costly for the employer so now most firms offer what is called a money purchase scheme. This means the money the employer and the employee have contributed to the scheme will form a pot of money that will be used to purchase an annuity, which is in effect a guaranteed pension for life. The uncertainty of these pension schemes was really what led to the increase in popularity of buy to let mortgages.
It is well known fact that over reasonable periods of time property prices do increase so buying a property as an investment vehicle should generate a profit when sold. One of the other advantages of buy to let is that in most cases the money derived from renting is paying the monthly mortgage premium. It also means that they have control over their own destiny and are not reliant on the stock market, in which the majority of pension contributions are invested. Many buy to let investors actually build up a portfolio of properties over a period of time by shrewdly investing in other properties, many of which are bought at auctions.
So what is the future for buy to let mortgages? They are currently unregulated but that is about to change when the Financial Services Authority bring it under their control. There will probably not be a great change regarding the buying transaction. You will still need 25% deposit and proof that the rental income will be 20% to 25% more than the mortgage payment. For those investors who have seen the growth in property values, even allowing for a downturn for 18 months or so, they will surely still continue to build their portfolios. After all if it is not the right time to sell when they finally retire they can still profit from the rental income they receive, which all things being equal will be higher than when they first bought the property.
Please remember that whenever taking out any type of mortgage that if you do not keep up with repayments you risk losing your property. For this reason some form of income protection insurance is recommended to cover you in the event of you being out of work for any period of time.
0 komentarze:
Post a Comment