BTL Mortgage Review for 2013

The buy-to-let mortgage market has been in the doldrums for several years after the ‘crash’ but recently there have been some signs of life. Here are some of the best deals for those landlords that are looking at dipping their toes into the buy-to-let market next year.

New Year opportunities

Most experience landlords know that the winter months are a good time to pick up a bargain. Sellers start to get desperate as interest particularly from owner-occupiers wanes. Therefore, if you are prepared to brave the cold then it can be an ideal time to pick up a bargain. The only thing that you do need is buy-to-let finance.

Market picking up

After the fallout in the mortgage market post 2008 the market has staged a steady recovery. The latest figures from the Council of Mortgage Lenders (CML) indicates that the number of loans continues to increase and now numbers 1 in 8 of all residential mortgages (the highest ever)

Andy Young at Property Hawk Mortgages comments:

“The buy-to-let mortgage market has expanded considerably over the last 12 months and there
are now more lenders and products for landlords to choose from. Another trend is that landlords are able to access larger sized loans. A recent survey from Property Hawk Mortgages reveals that the average Loan To Value (LTV) continues to increase as higher LTV buy-to-let mortgages become more generally available. The latest survey indicates it is now up over 5% quarter on quarter and stands at 72.63%."

However, supply of the highest 85% LTV products still remains limited. One of the best currently available is the Kent Reliance which currently offers a 5.49% (1.09% discount to their SVR) for 2 years. The downside being that there is a 2.5% completion fee which ramps up the overall APR for this product. Nonetheless; where your funds are limited or landlords are looking to gear up on their equity and buy more property then this offers an option.

Andy Young of Property Hawk Mortgages comments:

“Kent Reliance is perhaps the most innovative lender in the HMO segment and is currently the only lender in the buy-to-let mortgage market offering loans up to 85% LTV. So for landlords looking for a higher gearing, Kent Reliance is the go-to lender.”

No fee options

I like most landlords hate paying unnecessary fees. This applies to mortgage finance as well. Landlords who want to avoid all finance fees can do so with the Mortgage Trusts tracker with a current pay rate of 5.24% on a 4.50% LIBOR tracker. To transfer to this product there are no fees but there are steep redemption charges if the mortgage is redeemed in the first 2 years. However, the current projections on interest rates suggest a benign interest rate environment for several more years to come.

For those that are still concerned about a sudden increase in the interest rate environment then the Mortgage Trust also offers a fixed rate option fixed at 4.99% until the beginning of 2015. The mortgage is available up to 75% LTV and with a very reasonable 1% completion fee.

Long-term tracker

Those landlords that are happy that the interest rate will stay low for the foreseeable future might want to consider a long-term tracker such as the one offered by Paragon. The pay rate of their LIBOR tracker is currently fixed at 4.85% for 5 years and comes with a 1.75% completion rate.

Prospects for buy-to-let in 2013

With rents continuing to rise through autumn 2012 the prospects for buy-to-let as a long-term investment continue to be positive.

Andy Young of Property Hawk Mortgages comments:

“It is expected that the buy-to-let sector will remain healthy in 2013, with strong tenant demand and rental yields making it a good time to be a buy-to-let investor, and the supply of buy-to-let mortgage finance is likely to increase modestly to circa £18bn.”

In essence the prospects for landlords looking to expand in 2013 look strong as long as you are able to access the finance to make it happen.

For more expert advice contact Property Hawk Mortgages to explore all your options open to you in 2013 and remember ‘don’t believe the hype’ and keep your eyes firmly fixed on the long-term prize!

For Free BTL Mortgage Advice by phone Tel: 029 2069 5446