10:52 AM, 11th April 2023, About 8 months ago
The cost of maintaining monthly buy-to-let mortgage interest payments has rocketed by 75.7% in the last year – with those making a full mortgage repayment every month seeing an increase of 31.6%, research reveals.
The findings from specialist property lending experts, Octane Capital, analysed the cost of the average BTL mortgage and how this has increased as interest rates climbed higher.
The findings show that the average BTL investor is borrowing £217,364 after placing a 25% deposit on the average UK property price of £289,819.
And with a current average BTL mortgage rate of 5.32%, this would see the investor pay back £1,312 when making a full monthly repayment.
Octane points out that the average mortgage rate has risen by 2.12% in the last year, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6% – that’s an extra £315 to the cost of BTL borrowing.
However, many BTL landlords will opt to maintain the mortgage secured on an investment property by monthly interest only repayments.
The average interest only monthly repayment has climbed to £964 per month – which is an annual increase of 75.7%, or £415 per month.
Despite this increased cost, investor appetites for buy-to-let investment remains strong, Octane says, and its previous research shows that BTL loans have climbed by 12% over the last year.
Jonathan Samuels, the chief executive of Octane Capital, said: “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike, with buy-to-let investors also seeing the cost of borrowing climb substantially.
“These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.”
He added: “Despite this, we’ve actually seen an increase in the total value of buy-to-let loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the buy-to-let sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”
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