Buy to let landlords offered choice of 463 mortgage deals

Buy to let landlords offered choice of 463 mortgage deals

10:12 AM, 12th May 2011, About 13 years ago 5

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Businessman handshake in the cityLenders are encouraging buy to let landlords to invest in more property by increasing the number of mortgages and dropping interest rates.

Independent financial information firm Moneyfacts monitors the market and has disclosed borrowers can choose from around 463 buy to let deals – 55% up on the 299 mortgages offered 12 months ago.

The market is also becoming more competitive in other ways – the number of buy to let lenders is up 33% – from 48 to 64 in a year – while interest rates are dropping to an average 4.97%, down from an average 5.30% in May 2010.

Confidence is returning to the buy to let market, explained Louise Holmes, of Moneyfacts, as

“These latest figures, particularly the reduction in the average rate, suggest that the buy-to-let market could be returning to a competitive state,” she said.

“This will no doubt please landlords and property investors who have endured a tough time over the past few years.”

Recently, the Nationwide Building Society, one of the largest buy to let lenders through subsidiary brand The Mortgage Works, said the society would rather lend to buy to let landlords at 60% loan to value than first time buyers.

The introduction of a new buy to let product range by Skipton Building Society has reinforced the Moneyfacts view.

The lender is offering 60% and 70% fixed rate mortgages over 24 and 36 months at rates from 4.29% to 5.39%.

Fees are £245 on application and £1,250 on completion. Remortgages come with a free valuation and legal fees.

Leeds Building Society has cut rates from 4.44% to 4.29% on a 2 year discount package available at up to 70% loan to value.

Leek United Building Society’s new 2-Year 5.25% fixed rate mortgage comes with a low £99 arrangement fee and a £100 booking fee. The loan is for a minimum £75,000 up to £500,000 at up to 75% loan to value.

That adds up to a minimum £25,000 deposit on minimum borrowing. Rent cover is 125%.

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Shakeel Ahmad

7:25 AM, 17th May 2011, About 13 years ago

All very well. The issues are not only interest rates, product fee, paper work requirement & what happens when the interest goes up & the lenders working 3% to 4% spread or where lenders variable rate is 4% or more above the BOE rate. in future when the BOE rates goes up say 5% the borrowers will be paying 8 to 9%. The exit penalties are high average 3% of the outstanding amount.

In addition to above the interest/rent cover that is being asked is unreasonably high,

Mark Alexander - Founder of Property118

7:39 AM, 17th May 2011, About 13 years ago

Do you not think interest cover should be even higher based on these margins and that interest rates are only heading in one direction at some point?

Shakeel Ahmad

14:00 PM, 17th May 2011, About 13 years ago

If the lenders do not wish to lend than they can by all means increase the interest/rent cover. In places like London to have a loan to value of 60% to 75% is the most save lending one can ever make.

In so far rates only going one way. We are already paying around 5% to.5.50%, due to the lenders variable rates. Before the crisis the rates were similar, lending was upto 85% with an intrest cover of 115% to 125 %.

Mark Alexander - Founder of Property118

14:23 PM, 17th May 2011, About 13 years ago

Have you considered investing outside Lindon where rental yields are substantially higher?

15:57 PM, 17th May 2011, About 13 years ago

No, only in London & South London, yeilds are not everything for me.

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