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90% Loan to Value!

Buy to Let mortgage market heads for 90% LTV.

Mortgages for Business, the specialist Buy to Let mortgage brokerage, are reporting early indications of a dynamic shift in the Buy to Let mortgage market.

The established limit for investor borrowing has been at 85% loan to property value for some years, meaning the borrower has needed to put down a 15% deposit. However a small number of the sector’s specialist lenders are beginning to offer products at 90% loan to property value, lowering the deposit required by 5%.

David Whittaker, Managing Director of Mortgages for Business comments:

“GMAC began the move away from the 85% LTV products at the back end of last year when they launched an 89% LTV products. Now in the last two weeks we have seen Platform Home Loans and the Mortgage Works launch 90% LTV product ranges.”

“The move is indicative of growing competition in the Buy to Let market sector that now represents 8% of all UK mortgage transactions. Mortgage lenders are increasingly attempting to differentiate their products with improved product rates and terms and this is positive news for investors.”

It remains to be seen if other lenders will follow suit but four years ago most lenders would only lend at 80% loan to property value and now 85% is the industry standard.

“The only potential problem investors may come across is increased stress on the rent to interest calculation. Financiers base lending decision on rent being 20% to 25% higher than the monthly interest only mortgage payments. If the mortgage borrowing is higher this margin is more difficult to achieve.”


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