Lenders’ new moves confirm property investment is still attractive
In recent property investment news, beginner and experienced investors have received a boost with new buy-to-let mortgage deals from two big high street names. The fixed rate deals could help property investors in several ways. They also show that lenders remain confident about UK property investment opportunities, and are increasing their flexibility to work round strong interest coverage ratio rules.
Here we examine these new buy-to-let mortgage products, and the advantages they might offer you.
The Post Office expands its mortgages to property investor finance
The Post Office has moved into the buy-to-let financing market. You can now walk into a high street branch and come out with one of a range of buy-to-let mortgages. The fixed rate periods range from two years to seven years. Its ‘fixed fee assisted’ products are offered with no product fees and:
- Standard valuation fee paid by the lender
- Remortgage standard legal fees paid by the lender
Interest rates on the new mortgage deals start at 1.75%, dependent upon the amount of deposit paid and the fixed rate term.
Announcing the new mortgage range, the Post Office Money Managing Director, Owen Woodley, said:
“Property is still an attractive investment for many. However, factors such as the increased stamp duty tax on additional properties mean people are shopping around for the best deal to keep costs down.
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“We are continuing to improve our mortgage offering across the board to help customers make their buy-to-let aspirations a reality.
“We know that many of our buy-to-let customers will be first-time landlords and, as a result, we have aimed our new market-leading deals at the ‘cost-conscious aspirational investor’.”
Barclays new 10-year fixed rate deal nixes the ICR requirement
If you believe that interest could be a lot higher within the next ten years, then the new fixed rate buy-to-let deal from Barclays could provide the protection you need.
The fixed rate is set at 2.99%, and because it’s for more than five years Barclays does not have to apply its interest coverage ratio calculation when working out how much you can borrow. Instead, Barclays can use both rental income and personal income when assessing affordability. It means you could borrow more as you seek to add higher-quality properties to your portfolio.
However, before you rush to secure a 10-year fixed rate buy-to-let mortgage from Barclays, you’ll need to be certain that you do not sell your property within the fixed rate period. Doing so will incur a 5% penalty. If your mortgage balance is £150,000, selling your property even a day before the fixed rate period ends will cost you £7,500. The mortgage also has a £2,000 product fee.
Are these buy-to-let mortgage deals right for you?
When you make the decision about which mortgage product is the right one to support your property investment aspirations, the cheapest mortgage is not always the best. You’ll need to focus on questions that include the goals and timescale of your investment. You’ll need to be certain that the product fees don’t add unnecessary costs, and that you have a contingency plan in place which will stop a forced sale within the fixed rate period.
Fixed rate buy-to-let mortgages offer certainty of costs, and that will help you budget for profitable investment. Longer-dated deals could help you borrow more and take real advantage of the benefits of leveraging in property investment. They could help skyrocket your property investment profits. But you should always be wary of the fine print – unless the mortgage deal dovetails with your investment aims, then instead of skyrocketing your profits, expensive get-out penalty clauses could crush them.
Contact one of our team today on +44 (0)207 923 6100, and we’ll help you find a mortgage broker who understands property investment. When it comes to finding the finance that will skyrocket your property investment profits, you’ll find that a great mortgage broker is worth more than their weight in gold.
Meanwhile, keep tuned to the Gladfish blog for all the latest property investment news.
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