Posts with tag: buy to let mortgages

Cost of a BTL mortgage set to rise as investors choose longer deals

Published On: December 1, 2016 at 1:03 pm

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Concerning new forecasts indicate that buy-to-let investors face having to pay an extra £6,700 on their mortgage, when new rules on the length of loans are introduced next year.

At present, many landlords opt to take out two-year deals as they are cheaper than long-term loans. However, the Bank of England’s Financial Policy Committee intends to make it harder for landlords to secure short-term loans, after recently being granted more powers by the Government.

Concerns

Many regulators have expressed their concerns over aggressive buy-to-let lending practices at some banks. They feel that a number of investors are simply taking on too much debt and as such, will sink under the pressure of increased interest rates.

As a solution, they want to see more landlords signing up to longer-term, five-year deals, which tend to be higher. This means that borrowers will have to pay more, maybe thousands of pounds, over the life of the loan.

The figure of £6,700 is based on a £150,000 loan at a two-year rate of 1.59%-£199 per month-in comparison to borrowing the same amount at a five-year deal of 2.49%-£311 per month.

This additional £112 per month would mean the borrower has to pay an extra £6,720 over the course of the loan.

Cost of a BTL mortgage set to rise as investors choose longer deals

Cost of a BTL mortgage set to rise as investors choose longer deals

Hike preparation

Andrew Montlake, of London based mortgage broker Coreco, observed: ‘A lot of landlords won’t qualify for a two-year deal, so they have to prepare themselves for a potential hike in their mortgage payments.’[1]

The crackdown from the Prudential Regulation Authority comes into effect in January 2017 and will involve lenders conducting stress tests to make sure borrowers can repay their mortgage payments should rents rise.

Over the last few months, a number of lenders have increased stress tests for potential borrowers from 125% to 145%. The pressure is already on landlords, following a tough year of legislation changes and it will certainly be interesting to see how they cope.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/btl-mortgage-costs-set-to-soar-as-new-stress-tests-push-landlords-into-longer-deals

 

 

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Published On: October 24, 2016 at 10:13 am

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Buy-to-let property remains an attractive investment opportunity at a time of low savings rates and stock market volatility, insists specialist lender Together.

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Despite a Government crackdown on buy-to-let landlords, including the 3% Stamp Duty surcharge on additional properties, the abolition of the automatic 10% Wear and Tear Allowance, and the forthcoming reduction in mortgage interest tax relief, Together reports that investors continue to be drawn to the buy-to-let market, as the returns regularly outperform those of other investments.

The firm’s Commercial CEO, Marc Goldberg, explains: “Buy-to-let has proved to be a resilient sector this year, despite the tax changes introduced by the Government.

“Buy-to-let lending continues to perform well for us here at Together, and we’ve been able to grow whilst maintaining a high quality customer base. Given this growth, we want to ensure that we offer a variety of products to meet the continued demand.”

Together has recently introduced a new five-year, fixed rate buy-to-let mortgage to meet the demand from this growing market, with the maximum loan size increased to £500,000, while offering landlords the opportunity to fix their costs.

Goldberg comments: “Our new fixed rate product, as well as bigger loan sizes, will help us deliver more funding to property investors through our network of broker partners.

“We offer both interest-only and repayment options, with loan-to-values of up to 75%, and we’ll accept projected rental incomes, so landlords don’t need to have a tenancy already in place to secure the funding needed.”

He adds: “We also lend to limited companies and have seen an increase in applications from limited companies for buy-to-let funding as a result of the various tax hikes.”

Under the forthcoming changes to mortgage interest tax relief, limited company landlords will not be affected; only individual investors will face a reduction in the amount of mortgage interest that they can offset against tax. The Government has a guide on how the cut will work: /government-guide-tax-relief-changes-residential-landlords/

Together recently announced record trading results, with annual new lending for the year to 30th June 2016 surpassing £1 billion for the first time in the firm’s 42-year history. Its current loan book exceeds £1.8 billion.

Buy-to-let mortgage sales up by 19% in September

Published On: October 19, 2016 at 8:54 am

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The mortgage market experienced significant growth during September, with total sales rising by 8.4% to £1.2bn.

In addition, buy-to-let mortgage figures also rose by 19% to reach £2.9bn. Residential sales also increased by 6.2% to £12.2bn.

Regional mix

By region, performance was varied over the course of the last month. The North West and London came top of the table for buy-to-let mortgage growth, with rises in sales of 12.7% and 11.7% respectively.

On the other end of the scale, Scotland and Northern Ireland saw the worst monthly growth, of just 1.9% and 0.7% respectively.

Buy-to-let mortgage sales up by 19% in September

Buy-to-let mortgage sales up by 19% in September

 

Mr Iain Hill, Relationship Manager, at Equifax Touchstone, noted: ‘With unseasonal gains in August and encouraging figures for September, the market is showing positive signs for a strong end to the year. These healthy figures are very welcome, particularly in buy-to-let, where we have seen a number of new market entrants in the last year or so.’[1]

‘Although we still have a way to go to get back to the levels of business seen in 2015, the signs are promising. We are watching with great anticipation to see what this year’s unpredictable market will reveal next month,’ he added.[1]

[1] http://www.propertyreporter.co.uk/finance/buy-to-let-sales-surge-19-in-september.html

 

Buy-to-let mortgage lending defies tax changes

Published On: October 12, 2016 at 9:39 am

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Certainly, 2016 has seen landlords faced with some challenging legislations changes, as the Government tries to shift the balance of the housing market.

Former Chancellor George Osborne expressed his desire to return the market to a ‘level playing field’ between homeowners and investors. However, despite the raft of harmful regulation alterations, buy-to-let mortgage lending has actually seen a surge in activity during the last two months.

Increases

According to mortgage provider Connells, the introduction of the 3% extra stamp duty surcharge in April and other tax changes has not deterred investors. The firm’s valuation department reports that valuations for buy-to-let mortgages are actually up by 0.4% on the same period in 2015.

John Bagshaw, of Connells, noted: ‘Despite a bruising period of Government intervention, the buy-to-let sector has been finding its footing over the last couple of months, recovering from the 3% stamp duty surcharge, the restriction of tax relief on mortgage finance costs to basic rate tax only, and the removal of 10% wear and tear allowance.’[1]

‘The Government’s intervention had a significant effect in the short term but we appear to have recovered the lost ground now,’ Mr Bagshaw added.[1]

Buy-to-let mortgage lending defies tax changes

Buy-to-let mortgage lending defies tax changes

Remortgaging

In addition, Connells report that remortgaging valuation activity increased by 14.7% year-on-year. Many more first-time buyers are still entering the market to take advantage of the Help to Buy mortgage guarantee scheme, which comes to an end this December.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/sharp-rise-in-buy-to-let-mortgage-lending-despite-stamp-duty-hike

 

BLT Ltd companies applications rise to 63%

Published On: October 6, 2016 at 10:19 am

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New data released by Mortgages for Business indicates that 63% of applications from buy-to-let landlords purchasing properties are being made through limited companies.

This figure is a substantial rise from the 21% recorded just before alterations to mortgage interest tax relief were announced by previous Chancellor George Osborne in 2015.

Changing trends

There has been a substantial change in landlords’ behaviour, with many investors choosing to incorporate their business.

In contrast, the number of remortgage applications made via limited companies remained at a fairly constant level.

For market share, buy-to-let market products available to limited companies make up 16% of overall products. This is a rise from 13% recorded in the first half of the year.

Further data from the report shows the average rate of a buy-to-let mortgage slipped to 3.3% at the end of September, down from 3.7% in June. Rates for products available to limited companies fell to an average of 4.3%. This means that rates available to limited companies are only roughly one percentage point greater than the average market value.

BLT Ltd companies applications rise to 63%

BLT Ltd companies applications rise to 63%

Rates

A Mortgages for Business spokesman said: ‘Many lenders with product for both personal borrowers and limited companies, offer the same rates to both. At the moment, some of these lenders accept only SPV limited companies, including Foundation Home Loans and Paragon. Some of the more specialist lender and I’m primarily of Aldermore Bank, InterBay Commercial, Shawbrook and our own lending band Keystone Property Finance, also offer the same rates to trading limited companies.’[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-ltd-co-purchase-applications-rise-to-63.html

 

 

Two mortgage lenders cut BTL rates

Published On: October 4, 2016 at 11:56 am

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A brace of buy-to-let mortgage lenders have today announced changes and additions to their existing products.

Both Virgin Money and Aldermore have made the alterations, as competition in the market remains fierce.

Cuts

Virgin Money has announced cuts to both its buy-to-let and residential products. A new £300 cashback incentive has also been launched for customers taking advantage of selected two, three and five-year fixed rate deals.

Key alterations to buy-to-let rates at Virgin include:

  • a two-year fixed rate deal with up to 70% LTV, reduced to 2.09%.
  • a five-year fixed rate deal up to 70% LTV, reduced to 3.24%
  • a two-year tracker rate deal up to 75% LTV, reduced to 2.29%

Peter Rogerson, Virgin Money’s Commercial Director for Mortgages, noted: ‘The reductions we have made to our range ensure that we continue to offer attractive options for purchase and remortgage customers looking for residential and buy-to-let loans at a range of different deposit levels. We think these products will be well-received by the market which remains upbeat, as reflected in our recent poll of intermediaries where nearly 80% said they expect the mortgage market to grow in 2017.’[1]

Two mortgage lenders cut BTL rates

Two mortgage lenders cut BTL rates

Limited edition

Aldermore has also launched a range of limited edition buy-to-let mortgage products for investors looking for loans of up to £1m.

Rates on the firm’s five-year fixed rate deals have been cut by up to 0.74%.

New rates begin from:

  • 79% at up to 70% LTV
  • 99% at up to 75% LTV
  • 25% at up to 80% LTV

In addition, a new term variable rate buy-to-let mortgage is available at 3.68%, up to 75% LTV.

Charles Haresnape, group managing director of mortgage at Aldermore, said: ‘The change in the base rate has led to the average five-year fixed rate for a 75% loan-to-value buy-to-let mortgage falling below 4% for the first time and now is a great time for landlords to remortgage some or all of their portfolios.’[2]

‘Buy-to-let as an investment continues to be underpinned by strong fundamentals, with tenants who signed up to a new tenancy during the month of August agreeing to an average rental increase of 3.1% year on year. Aldermore looks to support landlords wherever possible, and our recent product changes are a testament to our commitment to those in the buy-to-let market,’ he added.[2]

 

[1] http://www.propertyreporter.co.uk/finance/btl-rates-cut-060-at-virgin.html

[2] www.landlordtoday.co.uk/breaking-news/2016/9/new-five-year-fixed-b2l-range-launched-by-aldermore