Following the 2008 crash that changed the face of the mortgage industry, things are finally on the rise for today’s buy-to-let landlords.
The industry has almost made a full recovery. From a high of offering around 3,300 products back in October 2007, there has been a rise back to over 2,000 mortgage products available to choose from today; including over 450 mortgages available for limited company landlords not using special purpose vehicles, the highest number in over 10 years.
However, with the number of products available to choose from on the rise, so too are the rates, with an increase in the average two-year fixed rate of 0.20% since September 2018 according to Moneyfacts.
The rise in lower deposit mortgage
In order to entice new landlords onto their books, mortgage lenders such as Vida Homeloans are tending to use lower deposit mortgages, such as the 85% loan-to-value (LTV) buy-to-let mortgage as offered by several mortgage lenders include Kent Reliance, Kensington Building Society and Vida Homeloans; some of the highest LTV products on the market at this point in time.
Despite the increase in rates, these lower deposit mortgages are giving landlords great opportunities to expand and grow their portfolios without having to cough up the substantial 25% deposit as was the case previously. However, as with every benefit, there comes some downfalls, and of course it should be no surprise that accompanying lower deposit mortgages are some higher interest rates, as these lower deposit mortgages carry more risk.
For example, all of the lenders previously mentioned offer a two-year fixed rate deal, with Kent reliance being fixed at 5.19% with a 2.5% product fee of the mortgage amount, and both Vida and Kensington offering a different deal of a fixed rate of 4.49% with a £1,995 product fee, regardless of mortgage amount.
The impact of economic uncertainty
As is common place in today’s economic setting, nothing is certain, and as this economic uncertainty continues to influence lenders’ view of the buy-to-let market, it would certainly make sense for landlords looking to purchase or remortgage in attempt to expand their portfolios, to take advantage of the plethora of choices that are currently available in today’s market.
Kent Reliance, Kensington Building Society and Vida Homeloans are not the only lenders that are offering carrots to landlords, and according to Moneyfacts, several UK high-street banks and building societies including Barclays Banks and HSBC UK are offering their own incentive packages to help entice landlords onto their books. Notably, Barclays has reduced its rates across its buy-to-let purchase and remortgage range, including in a 1.79% fixed rate until 2022 on a 75% LTV, with an incentive package. Meanwhile, Yorkshire Building Society is offering an incentive package whereby there is a five-year fixed rate available for 1.96% on a 75% LTV, with a free valuation and £500 cashback. For landlords looks to remortgage their properties, two places to start according Moneyfacts would be Skipton Building Society and HSBC UK with both offering incentivised low two-year fixed remortgage deals.
If you are a landlord looking for UK property investment opportunities, with lower deposit mortgages, average rates sitting at 3.12% for a two-year fixed rate deal and a plethora of incentives packages available, now is a great time to investigate your options before the economic situation changes again.
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