Posts with tag: buy to let mortgages

Mortgage Payment Holiday Will Also Apply to Limited Companies

Published On: March 23, 2020 at 10:51 am

Landlords who have applied for buy-to-let (BTL) products through limited companies will also be eligible for the three month mortgage holiday announced by the Chancellor last week.

Chancellor of The Exchequer, Rishi Sunak announced last week that people struggling with their finances due to Coronavirus would be able to take a three month mortgage ‘holiday’ which will allow them to start paying again at a later date.

His decision has been hailed as good news for borrowers in financial difficulties. Landlords whose tenants are struggling to pay the rent will be able to defer their mortgage payments, including those landlords that chose to set up as limited companies, rather than sole traders, according to UK Finance.

In addition to this, both UK Finance and the Building Societies Association have made it clear that all repossession and eviction processes will be put on hold for the next 90 days, meaning that both tenants struggling to pay the rent, and homeowners struggling to pay the mortgage will be able to avoid homelessness for the near future.

Buy-to-Let Mortgage Rates Rising from Record Lows

Published On: October 30, 2017 at 10:57 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,mortgage rates,mortgages

The buy-to-let market has been hit from all sides of late, with tougher affordability rules and key regulatory changes. Now, to make matters worse, buy-to-let mortgage rates are rising from record lows.

According to the latest data from Moneyfacts.co.uk, the average buy-to-let mortgage rate is on the rise. In fact, since 1^st October 2017, the average two-year fixed rate has increased by 0.05% and is on target to get back to the rate seen in September, before the latest set of lending changes came into force.

At present, the average two-year buy-to-let fixed rate is 2.84% – up from 2.79% at the start of October, but down from 2.86% in September.

Meanwhile, the average five-year fixed rate is 3.44% – up from 3.43% at the beginning of the month, but down from 3.49% in September.

Buy-to-Let Mortgage Rates Rising from Record Lows

Moneyfacts also recently reported that the number of buy-to-let mortgages available has dropped slightly.

The Finance Expert at Moneyfacts, Charlotte Nelson, says: “It has been a turbulent time for the buy-to-let market, thanks to multiple rule changes, and there’s no sign of calmer waters, as rates are starting to creep up from their record lows. While a 0.05% increase appears insignificant, it marks a turnaround in the buy-to-let sector, so landlords are now faced with not only more hoops to jump through, but higher rates as well.

“As in the residential mortgage market, much of the rise in buy-to-let rates can be attributed to base rate speculation causing swap rates to increase significantly. This has given lenders little choice but to increase their mortgage rates, with 18 individual providers so far having upped theirs since the start of September.”

She continues: “The beginning of this month marked another significant change in the buy-to-let mortgage market, as lenders are now required to apply stricter underwriting criteria to portfolio landlords. This has seen the buy-to-let mortgage market shift away from landlords who have three or fewer properties, with a 13% drop in the number of products available to this group since the start of October.

“This portfolio change may have had a more practical effect on rates as well, with lenders not just being a little more cautious; some lenders may have had to change their process behind the scenes to accommodate the new rules, and this extra cost may be impacting these providers’ pricing activity.”

Nelson concludes: “With all the changes and now the rising buy-to-let rates, it is going to be more difficult for individual landlords to make a profit that is worth their efforts. Landlords will have to weigh up the costs to figure out what their best possible option may now be. Anyone who is unsure should seek the advice of a financial adviser.”

Meanwhile, specialist lender Together is further enhancing its offering for landlords and property investors with a new holiday let product, which has been created in response to demand from professional landlords looking to let their properties on a short-term basis.

A growing number of investors are turning to holiday lets as an alternative to traditional buy-to-let, thanks to attractive rental yields and websites like Airbnb, which have revolutionised the holiday let sector.

Market demand for holiday lets is buoyed by record numbers of tourists visiting the UK, estimated to be 40m this year, and more Britons staying at home for their holidays post-Brexit.

Marc Goldberg, the Commercial CEO at Together, comments: “Our aim is to support landlords and investors by providing innovative finance products that are tailored to their needs. Holiday lets can deliver high yields and there’s strong market demand, so we’re delighted to launch this new product, which we believe will complement our existing offering in this sector.”

Loans of up to £2m are available for purchase or remortgage, while terms range from four to 30 years, with a minimum five-year term on fixed rate loans.

The holiday let product is also available on a second charge basis, for landlords looking to raise additional finance on their rental property.

Number of Buy-to-Let Mortgage Deals Available Drops Slightly

Published On: October 23, 2017 at 9:26 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,buy-to-let finance,mortgages

Number of Buy-to-Let Mortgage Deals Available Drops Slightly

The total number of buy-to-let mortgage deals available on the market has dropped slightly over the past month, but remains at its second highest level since the recession in 2008, amid fierce competition between lenders, according to the latest figures from Moneyfacts.

There are currently 1,723 buy-to-let mortgage deals available, down from 1,725 in September, but significantly higher than the 1,477 products on the market a year ago.

However, this marginal monthly decline suggests that mortgage providers may now be holding back as they take stock of recent lending rule changes. Mortgage lenders are now required to apply stricter standards to portfolio landlords – those with four or more buy-to-let properties.

At the same time, the rates on buy-to-let mortgage deals are beginning to edge up.

The data from Moneyfacts reveals that, while the average buy-to-let fixed rate mortgage stood at a record low 3.15% in September and remained at that level when October’s figures were calculated, it has since started to creep up and, at the time of writing, stands at 3.17%.

This pattern can also be seen across the majority of terms and loan-to-value ratios (LTV).

For example, the average two-year fixed rate buy-to-let mortgage stood at 2.79% at the beginning of October, but has now risen to 2.82%. Meanwhile, the average three-year fixed rate has increased from 3.15% to 3.20% over the same period. Only the average five-year fixed rate buy-to-let deal remains unchanged, at 3.43%, yet, even then, it fell to 3.41% just a week ago and has since edged back up.

Could it be that lenders are preparing for a potential increase in the Bank of England’s base rate? It has been suggested that interest rates could soon rise from their record low 0.25% over the coming months.

Have you seen a decline in the number of buy-to-let mortgage deals available?

Around 80% of Buy-to-Let Mortgage Applications made by Limited Companies

Published On: October 16, 2017 at 9:43 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,limited companies,mortgages,tax changes

Almost four out of every five pounds lent for buy-to-let purchases via Mortgages for Business was borrowed by a limited company landlord in the third quarter (Q3) of the year, according to the firm’s latest Limited Company Buy-to-Let Index.

Around 80% of Buy-to-Let Mortgage Applications made by Limited Companies

This represents 79% of completing buy-to-let purchases by value, up from 73% in Q2.

The index also shows that mortgage activity by landlords using limited companies remained high generally throughout the quarter. Limited company transactions (for purchases and remortgages) accounted for 48% of buy-to-let completions in Q3 by number of mortgages, and 47% by value of lending.

The increase in the use of limited companies by landlords is also reflected in statistics held by Companies House, which show that there was a spike in registration for Special Purpose Vehicle (SPV) limited companies (with property related SIC codes) in 2016, following the 2015 Summer Budget, in which the former chancellor, George Osborne, announced changes to mortgage interest tax relief for individual investors.

Steve Olejnik, the COO of Mortgages for Business, comments: “There was, unsurprisingly, a spike in SPV registrations last year, but it looks like the numbers have been increasing for considerably longer than might be expected. Looking at historic registrations, numbers have been on the rise ever since 2008, which, I’m sure you can guess, was not a popular year to start a property company.

“That said, the 2015 Summer Budget has noticeably sped things up, with 2015 and 2016 showing the strongest growth in registrations in the sample, whether proportionally or in absolute terms. Over 20,000 new SPVs were registered in the year so far compared to c.13,000 in 2014 – scaling up suggests a figure somewhere just shy of 35,000 by the end of the year, an increase of c.35% over 2016.”

He explains: “Landlords are turning to SPVs because of the benefits they bring in the form of tax efficiencies and softer affordability testing. Switching to corporate structures is not without risk, however, and we recommend all our clients take professional tax and finance advice before deciding how to proceed.”

The index also reveals that pricing of buy-to-let mortgages available to limited companies saw a marked contrast between fixed and variable rate products. While fixed rate products experienced no change in pricing for two, three or five-year terms, variable rate products saw a sharp drop in pricing, down by 0.4% to 4.0%. These products are now competitive with their fixed rate counterparts.

Mortgage Lending Strengthened in August, Reports UK Finance

Published On: October 16, 2017 at 9:27 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,first time buyers,homeowners,mortgages,remortgaging

The latest UK Finance data shows that lending for house purchase was higher in August 2017 than in both the preceding month and a year earlier.

Mortgage Lending Strengthened in August, Reports UK Finance

During August, first time buyers borrowed £5.7 billion – 16% more than in July and 12% up on August 2016. They took out 34,400 mortgages – 14% higher than the previous month and 9% higher on an annual basis.

Home movers borrowed £8.4 billion in August – 18% more than in July and 20% higher than in August last year. This equated to 38,500 loans – up by 17% month-on-month and 13% on August 2016.

Remortgaging by homeowners totalled £6.4 billion in August – 4% less than in July, but 8% higher than the previous year. The number of people remortgaging totalled 36,700 – down by 1% on July, but 5% up on August last year.

Buy-to-let lending totalled £3.1 billion in August – down by 3% on July this year and the same level as in August last year. This equated to 20,400 mortgages – the same as in July, but 4% higher than in August 2016.

The Head of Mortgages Policy at UK Finance, June Deasy, comments: “Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in Stamp Duty.

“Over the last 12 months, the number of people remortgaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.”

On a seasonally adjusted basis, borrowing by first time buyers and movers increased by both value and volume. There was a decline in both the number of people remortgaging and the value of lending. The value of buy-to-let lending was unchanged, but there was a small decrease in the number of buy-to-let borrowers remortgaging.

The proportion of household income taken up by mortgage payments edged up for first time buyers in August (to an average of 17.5%), but was unchanged for movers (17.6%). Overall, it remains low by historical standards.

The average amount borrowed by a first time buyer rose from £138,999 in July to £140,035 in August. There was a smaller proportionate increase in the average first time buyer household income, up to an average income multiple of 3.63. The average amount borrowed by movers increased from £180,000 to £182,750, while their average income multiple rose to 3.40.

Remortgaging accounted for more than two-thirds (68%) of buy-to-let lending in August, however, it was 5% lower than in July. Borrowing for buy-to-let house purchase rose by 11%. Nevertheless, borrowing for house purchase by buy-to-let landlords remains at a lower level than before the introduction of the higher Stamp Duty rate last year.

Landbay Reports Record Buy-to-Let Lending in September

Published On: October 2, 2017 at 10:11 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,mortgage lender,mortgages,PRA changes

Landbay Reports Record Buy-to-Let Lending in September

Digital mortgage lender Landbay has reported a record month for buy-to-let lending in September, with a total of £6.31m lent across 31 mortgages during the month.

September’s lending levels were higher than the two previous months combined, due in part to both swelling inflows through the Innovative Finance ISA and mounting institutional investment on the peer-to-peer lending side, combined with a broadened range of intermediary partners on the borrower side.

As the Prudential Regulation Authority (PRA) introduces fresh regulation on the buy-to-let mortgage market, Landbay feels that it is in a strong position to capitalise on what is fast becoming an increasingly professional and specialised buy-to-let market.

The PRA’s new underwriting rules have caused a number of mainstream lenders to reconsider their commitment to the buy-to-let lending market in recent months, but this has played into the hand of specialist lenders like Landbay.

The momentum of lending in September is expected to continue into the fourth quarter (Q4) and beyond, as portfolio landlords and their brokers look to specialist lenders to support them through the more restrictive lending environment.

As Landbay approaches its fourth birthday, it has now lent a total of £59.56m to professional landlords across the UK, with zero defaults, arrears or late payments to date.

The CEO and Founder of the lender, John Goodall, says: “Over the past four years, we have invested a lot of time and money into building a platform that we can be proud of; one that provides a competitive source of funding for professional landlords, a credible opportunity for investors, and is able to scale quickly to meet growing demand for specialist buy-to-let lending.

“Like any fast rising new entrant, we’ve experienced some growing pains along the way, but our track record speaks for itself and we now have all the building blocks in place to support continued expansion of the company.”