Buy-to-let mortgages that will make your eyes pop

Mortgages and Home

John Fitzsimons
Updated on 06 December 2010 | 7 Comments

With new deals and record demand, things look good for landlords.

Landlords have had a tough time over the past couple of years, with financing tough to come by, and issues with tenants falling behind on rents. However, as we move into 2011, the position for landlords has rarely looked so rosy.

Rapidly rising rents

The big boost for landlords at the moment, and the reason that many are hoping to add to their portfolios in 2011, is the fact that rents are on the up. In fact, it’s fair to say they are shooting up – according to the Royal Institution of Chartered Surveyors rents are rising at the fastest rate in three years.

It’s very simple to see why. Those who might like to buy are unable to, due to continuing mortgage constraints – gross mortgage lending levels for the last two months have been at ten-year lows – so are forced to continue renting. As a result demand is very high for rental properties.

However, there’s just nowhere near enough supply to satisfy that demand. Earlier this year it hit an all-time low, according to the Association of Residential Letting Agents, with 70% of member offices reporting more prospective tenants than properties. Couple massive demand with significant undersupply, and rents are only going to head in one direction.

Avoiding the voids

In a further boost to landlords, it’s been confirmed that it’s not just that rents are on the rise, but the periods that each property is empty – known as void periods – is also falling significantly.

All about the money

However, as any landlord will tell you, there is one very obvious barrier to any aspirations they may have to expand their portfolios – money.

While most conditions are looking pretty perfect for landlords, the mortgage market remains tricky. Sure, we’ve seen the return or launch of new lenders into the market, outfits like Kensington, Precise Mortgages and Paragon Mortgages. But these lenders are not in a position to do huge amounts of lending, with incredible market-leading deals just yet.

New deals

However, a real plus for landlords is that ever so gradually, lenders are making moves to make their product ranges a touch more attractive to those landlords in a position to take advantage.

John Fitzsimons highlights three things to consider if you’re planning a buy-to-let investment

Just last week, The Mortgage Works, one of the most dominant lenders in the buy-to-let market place, unveiled a revamp of its product range with cuts of up to 0.35% across its existing deals, the launch of a new 65% loan-to-value tier, an increase to the maximum loan size available as well as new deals designed for first-time landlords and products carrying no arrangement fee at all (as the tables below demonstrates, some of the fees charged for buy-to-let mortgages are enormous).

Other lenders, including Platform, have launched new deals in direct response to feedback from landlords. Things are far from perfect, but they are certainly getting better.

Brokers are vital

However, as the vast majority of property investors will tell you, buy-to-let mortgages are about far more than simply the interest rate and the arrangement fee. Different lenders will have different criteria based on the size of your portfolio, both in terms of the number of properties and how much that portfolio is worth.

That’s where brokers are so crucial to landlords. Not only can they get access to deals that you won’t be able to apply for direct, but they can also provide some guidance beyond headline rates on which lenders are most likely to embrace your business. Our mortgage team have extensive experience in the buy-to-let mortgage market, and what’s more, their advice is absolutely free. Just head over to our mortgage centre, and you can pick their brains via email, instant messenger or even over the phone.

10 tremendous fixed rate landlord mortgages

Lender	Term	Interest rate	Maximum loan-to-value	Fee
The Mortgage Works	Two years	3.99%	65%	3.5% of advance
The Mortgage Works	Two years	4.49%	75%	3.5% of advance
Platform	Two years	5.19%	70%	£1,035
Post Office	Two years	5.45%	75%	£1,495
Clydesdale Bank	Two years	6.19%	80%	£995
The Mortgage Works	Three years	4.99%	75%	3.5% of advance
Manchester BS	Three years	4.99%	70%	£995
Post Office	Three years	5.29%	75%	£1,495
Manchester BS	Five years	4.99%	70%	2.5% of loan
National Counties BS	Five years	5.79%	70%	£995

8 tremendous tracker rate landlord mortgages

Lender	Term	Interest rate	Maximum loan-to-value	Fee
The Mortgage Works	One year	2.74% (tracks base rate + 2.24%)	65%	3.5% of advance
Platform	Two years	3.29% (tracks base rate + 2.79%)	65%	3% of advance
The Mortgage Works	Two years	4.19% (tracks base rate + 3.69%)	75%	3.5% of advance
BM Solutions	One year	4.20% (tracks base rate + 3.70%)	75%	2.5% of loan
Leeds BS	Two years	4.29% (tracks standard variable rate – 1.70%)	65%	£999
Nottingham BS	Two years	4.59% (tracks base rate + 4.09%)	75%	£995
Precise Mortgages	Two years	4.89% (tracks LIBOR + 4.16%)	75%	2% of advance
Precise Mortgages	Two years	5.09% (tracks LIBOR + 4.36%)	75%	1.25% of advance

More: Why you're better off living in the city | There’s never been a better time to get a credit card

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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Comments

IPINLive
13 December 2010
Years ago (before the "boom" in B2L) being a landlord was a fairly straightforward business, with far less hate-mail/posting and general degradation of the concept. Typical landlord would release some equity, buy a run down house in a student rich area (Oxford or Cambridge) and do it up a bit and rent it out. Few complained, or if they did it wasn't that loudly. Suddenly, the world of [url=http://www.ipinglobal.com/ipin-live/blog/256910/buy-to-let-my-television-said-it-was-a-good-idea]television and media decided that buying property would make entertaining watching/reading[/url], and by all accounts the masses agreed, just as happened before with overseas property, and before that with buying and selling things at auctions and car boot sales and what have you. The main reason the property market has got into the state it has, is down to over hyping to the point of B2L being a get rich quick concept that simply isn't true - as the market has now proven (and will likely continue to do so for some time) Rents may well be rising, and there may well be deals out there on B2L mortgages, it doesn't make it a good idea though unless you take into account the extensive variables that will kick in over the next few years (inflation being the main one at this point). Having said that, everyone owning their own home in the forever Utopian ideal is not the answer either (nor could it happen anytime soon if at all in the UK). Look at France and Germany - in comparison, healthy economies at the moment. Is this down to everyone owning their own home? No. Most people in Germany and France don't own their own property until they hit their mid 40's and early 50's. Like it or not, their system works, and it pulls in foreign investment at the same time - something the UK badly needs. Property is still a viable long term investment, just not the way it is done in the UK right now. 
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FireBlade
08 December 2010
@Cue- well said.
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smiler
06 December 2010
I would take my HAT off to . [b].Luniverisal, supasap and cue[/b] but its tooo cold (smile). So much good sence you have. Shame each and every goverment do not have the basic common sence that EVERYTHING AND i MEAN EVERTHING IS BUILT ON MAKING THINGS. Houses would not be so expensive if each and every government built houses. Low level of council houses and it will get worse. [b]Now Nickpike[/b], You want properties to go down. May I add to our colleauges above. Society is geared around the;_ Home, House or property. Because a building houses so many goods which we should be making in England. Furthermore, If a large percentage of people did not buy property to rent to House people [b]who can not buy, afford or what to buy in the first place[/b] then there would be many poor, run down properties thoughout our communities. All the DIY Companies would not be around and reduction in the sale of many goods. less jobs. more stress and Mental illness and a higher un-happy population. The general population thinks that being a Landlord is easy. [b]Well it is no.[/b] I spend a great deal of money on my properties to renovate them to an high quality standards and then a few months later after a tennacy moves in the place in dis-respected, they stop paying the rent. YES, I/the letting agent vets them. The Mortgages of BTL and the residentrial should be trought forward to make the Banks, lend, yes at a responsiable level. By LOVEMONEY continues to promote mortgages which over 7 out of 10 can not get in the frist place. YES, AGAIN with a good credit score. Most Landlords work hard to provide a good accommodation for not the TRUE rent which should be in place. ie, mortgage,renovation costs, admin, on-going up keep, renting mangerment, Maintenace of gas/electric, etc. The average rent in Birmingham for a family is £600. Is that enough to cover the costs. To get through is based on, Goverment, Lovemoney and others to getting the Banks to lend . .Yes, [b]at a good rate for all the buy property,[/b] if they want. Keep SMILING, it soon will be Christmas.
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