New year finance review
The Co-op announced last week that it was stepping up lending into the buy-to-let mortgage market by a third this year. Their specialist lending arm, Platform has allocated at least £600m for buy-to-let loans in 2012.
The attractiveness of the buy-to-let market to lenders is not surprising given the relative buoyancy of the rental market and the projected growth in the private rental sector.
Rightmove recently reported that there were nearly three times more buy-to-let mortgage products available than there were two years ago.
So are the prospects for buy-to-let finance brightening up and what will we see in 2012?
Buy-to-let finance key developments
We put some questions to Andy Young, Managing Director of Property Hawk BTL Mortgages and asked him to highlight some of the key themes that are likely to define new lending in 2012 along with pinpointing some of the best products currently available.
BTL Mortgage Search FREE – market beating rates
What do you predict for the buy-to-let mortgage market in 2012?
Overall 2011 was a good year for the buy-to-let mortgage market with an increase in the number of lenders and products available, which has resulted in wider choice and better deals for landlords. The increase in lenders and products is undoubtedly a good sign for residential property investors and, even though the mortgage market as a whole is likely to remain flat during 2012, there should continue to be some growth in the buy-to-let mortgage sector. This uplift in buy-to-let business is likely to be driven by existing specialist lenders, regional building societies and recent entrants like Abbey. However, the demand for buy-to-let finance still outstrips supply and further product innovation is required to meet the needs of landlords.
What mortgage options are there for first-time landlords?
The mortgage market for first time landlords is pretty healthy at the moment with many of the current buy-to-let lenders offering products to new investors, including The Mortgage Works (TMW), Paragon, Leeds Building Society, Hinckley & Rugby Building Society and BM Solutions.
Are higher LTV (loan to value) deals better for landlords?
Should landlords be gearing up?
There has been an increase in the number of products available in the higher LTV brackets, including an 85% LTV mortgage with Kent Reliance.
Generally speaking geared investment is a sensible option for landlords and higher LTVs can provide greater opportunity for obtaining buy-to-let properties. However, some portfolio landlords investing for the future have access to higher deposits for purchases or may prefer to retain the equity in their existing properties.
What about mortgage options for landlords looking to expand their portfolios?
For landlords looking to release equity from existing buy-to-let properties to expand their portfolios, there is a good choice of remortgage products currently available, including deals with incentives such as free valuations and no legal fees. For landlords with larger portfolios, Paragon Mortgages and Kent Reliance offer the largest lending aggregates at the moment.
What are the hottest deals?
For landlords looking for the highest LTV one suggestion would be Kent Reliance who offer up to 85% mortgage on a 2 year fixed rate of 5.99% (completion fee 1%, booking fee £130).
Those landlords who are guarding against future fast interest rate rises and need the certainty of a fixed rate of interest should have a look at the Leeds Building Society which are offering a 4.59% fixed rate mortgage up to 28/2/2015. They also offer a 4.99% rate product without the £800 completion fee and free valuation fee up to £335 for purchases and remortgages with free legal’s on remortgages. Both mortgages have a booking fee of £199 and are available up to 70 loan to value.
National Counties are doing a four year fixed rate mortgage up until 31/03/2016 on a fixed rate of 4.79% (70% ltv completion fee £895).
Landlords who want the flexibility of a low variable rate should have a look at Godiva’s 4.19% variable rate with no early repayment charges on it’s 65% LTV mortgage. Free Vals up to £700 for purchases and remortgages and free legal’s are available on remortgages (booking fee £250, arrangement fee £999)
A promising start!
The message is clear. After the dark days of 2008 the buy-to-let mortgage market is picking up as more competition and confidence returns to the market. Nobody says getting a great deal is going to be easy, but if landlords are prepared to persevere then there are some increasingly competitive deals out there. Unfortunately, for many landlords with historic deals just above the base rate; there is nothing to rival our market beating rates. So sit tight and enjoy it while it lasts!
BTL Mortgage Search FREE – market beating rates