The flurry of new information and offers on buy to let mortgages has necessitated a second blog post! It is a great time to think about a new mortgage however many properties you have and here are three key things to know as lenders and advisers jostle to grab investors’ attention:
1.) Lock into a five-year fixed rate: Specialist broker Mortgages for Business has recommended that now is the time to fix your rate for five, or at least three, years. They report that the cost of a three year fixed rate is almost the same as when SWAP rates (how lenders acquire their fixed price) bottomed out in April 2013, while five year costs have risen by around 0.1% per annum. It is hugely unlikely that this can continue, especially with the impending interest rate rise, and so it cannot be long before fixed rates increase. Strike while the iron’s hot.
2.) Portfolio restrictions and independent brokers: If you are planning to expand your portfolio, it is vital that you get expert advice from an independent broker as many lenders have restrictions on the number of properties you can have with them and/or the total money outstanding on the amount of lending they are prepared to do. Some do not like it if your sole income is from property and other criteria may well come into play, such as maximum length of tenancy. Build a spreadsheet for your properties, showing type, value, and mortgage details (who it’s with, what type it is and how much the payments are). This way an independent broker can formulate the best plan of action.
3.) Consider multiple buy to let mortgages: Specialist lenders can provide multiple buy to let mortgages which cover a whole portfolio and could save you a lot of time and effort. Still, if you have built up a portfolio over several years, you may well not be able to get the same low rates as in the past. You should always use an independent, expert broker who understands the implications of managing a portfolio. Mainstream lenders, for example, may shy away from a landlord whose income is significantly impacted by the tax-efficient tactic of carrying forward losses from previous years. Independent brokers will understand this practice and be able to set you up with similarly understanding lenders.