The impact of improved buy to let mortgage options

Regular readers of the Rentify newsletter will have noticed an ever-increasing number of buy to let mortgage options becoming available to investors. And new data from the Mortgages for Business Complex Buy to Let Index has underlined the positive effect this is having on the sector. There was a significant uptake in lending for new properties in the final quarter of 2013, with 47% of these mortgages going towards new Buy To let Properties. This represents an increase of 9% on Q3. Buy to let has recovered so strongly from such a low base point that providers have seemingly found it hard to keep up with its popularity. Now, however, the options are beginning to reflect the strength of the market. To take one example, The Mortgage Works has just introduced 5 new buy to let mortgage products (please note this is simply an illustration of the trend and not an endorsement). If you wish to expand your portfolio, now is the time to give serious consideration to doing so. You should always consult an independent mortgage broker as they often have access to exclusive rates not available on the high street and will explore the whole market to find the best deal for your circumstances.

As ever, a note of caution must be sounded. We reported last week on the slowing  of rental growth and this is something to keep in mind. But, as many landlords are finding out, more (and more complex) buy to let mortgage products are being made available which give higher yields. Landlords must also not forget that interest rates are incredibly low and will only increase. Although it is unclear whether this will happen sooner rather than later, Mark Carney has recently confirmed there will be no imminent increase. The key is always to do your research and speak with specialist lenders. For example, here is a good starting point comparing an ‘interest only’ and ‘capital repayment’ buy to let mortgage. The conditions are broadly there to help landlords and keep the market buoyant throughout 2014 but each individual landlord will need to do their own thorough investigation to find out what is best for them.

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