The popularity of buy-to-let shows no signs of waning with incredibly low mortgage rates and healthy yields compared with other investments.
While many lenders abandoned the sector after the credit crunch, they have been gradually returning and offering more buy-to-let mortgage options at cheaper rates. Landlords can access two-year fixes from 2.25 per cent or five-year fixes from just 3.49 per cent.
Opportunities in the buy-to-let sector are also growing as pension freedoms introduced on 6 April have left many people considering using their retirement cash to buy a property.
However, it is not just about cheaper mortgage rates – crucially, there has also been some movement from lenders on criteria. This is vital as it doesn’t matter how cheap the buy-to-let mortgage rate is if you can’t access it.
Landlords have faced issues with ‘stress testing’ where lenders have used a high notional rate rather than pay rate to ensure that the borrower can afford the loan following any interest rate increases. This can make it difficult to get the numbers to stack up, particularly in London.
However, there are options for landlords in London with some lenders prepared to stress test on pay rate. Please get in touch for more information.