I am sure we all agree that the financial world we knew four or five years ago has changed – almost beyond recognition. However, despite the fact that bank base rates have been at a record low of 0.5% for over 3 years, finance remains difficult to obtain and relatively expensive. For landlords, both large and small, looking to expand or re-mortgage and successfully obtaining finance in the last few years has been tough; even with a successful business and a healthy deposit. When buy-to-let lending was at its peak in 2007, nearly 50,000 BTL mortgages per month were being sold. By 2009, lending dropped nearly 80% to less than 11,000 per month. But there is good news on the horizon. If you are like me and looking to increase your portfolio, as confidence slowly returns there are more lenders either entering or returning to the BTL market; especially to the smaller landlord. There are more products with a broader range of loan to values (LTV) ratios available and at better interest rates.
NLA Mortgages, which offers cashback for NLA members, show 24 lenders currently offering 355 BTL products. While this is slightly down on last month, it is more than double the low point in 2009. This is good news for landlords looking for finance.
What’s more, for the larger landlords, those set up as a Limited Company or those with HMOs, should watch out for some well-priced new products due to be released later this month from a lender new to the sector.
We are also seeing an increase in the ‘Silver Buy-to-Letters’. Cash remains king as far as starting or expanding your portfolio is concerned. While there are some 80% and even 85% LTV products around, the bulk of products require a landlord to place a deposit of at least a quarter of the purchase price. This has created a small but growing new landlord community: those people in their 40s and 50s, fed up with low interest rates on savings, are turning their assets into investments by purchasing property for rent. Lenders are keen to lend to this ‘silver generation’, as they have the all-important and readily available cash deposit.
With the Bank of England base rate still at an all-time low, property prices still depressed in most areas, more people turning away from traditional saving accounts causing more BTL products to enter the market. If you have the deposit, this is the time to re-finance or expand your portfolio. This confluence of events will not last forever so seek out the best product for your needs whilst you can. But remember, do not overstretch yourselves and if you are an NLA member, you can visit the online library for more information.
Good Landlording ….