Top mortgage deals for landlords

Landlords are getting more confident, and expanding their portfolios. These are the mortgage deals they'd be mad to miss!

It’s not that long ago that many people, myself included, were a bit concerned about the prospects for landlords.

The Coalition Government was telling anyone that would listen - all strictly off the record of course – that Capital Gains Tax was laughably low at 18%, and would simply have to be ramped up to bring it closer to income tax - so potentially 40% for higher rate taxpayers.

Cue weeks of speculation of landlords flooding the market with their portfolios to avoid this massive tax hike, and predictions that house prices would fall if the oversupply swamped the market.

But it didn’t happen. Capital Gains Tax only went up by 10%, and even then only for higher-rate taxpayers. Not only have landlords dodged a bullet – they are back in the mood for buying.

Expanding portfolios

A new survey of landlords by buy-to-let lender, Paragon Mortgages, has demonstrated just how keen that appetite has become.

It found that the number of landlords planning to purchase investment properties in the next quarter reached 21%, almost double the figures of the two previous quarters, 11% and 12% respectively.

So why are landlords so confident?

Snap up a bargain

Obviously, the modest change to Capital Gains Tax is a plus,  but there are a couple of other factors contributing too.

Firstly, there is the likelihood of snapping up a few bargains.

Recent months have seen far more sellers coming to the market than buyers. Indeed, according to Hometrack, since March supply has grown three times faster than demand. Similarly Connells has reported a 20% increase in valuations in June compared to May.

All of this extra supply is already having an effect on house price growth, which has ground to a halt, with predictions house prices may actually now fall. That means now represents a decent opportunity for long-term landlords to get hold of a few bargains.

Rising demand

However, the real reason so many landlords are itching to add to their portfolios is their confidence in tenant demand.

Most industry figures expect tenant demand to increase in the coming months and years. Paragon cites rising population levels, higher net migration, and a growth in one person households and students as long-term reasons to be confident.

But there are also plenty of short-term measures likely to spur interest in renting. House prices are sufficiently high that buying is out of the reach of many, and affordability will only get worse thanks to the VAT rise. Meanwhile, social housing levels are unlikely to improve with the Government on a deficit cutting drive.

All reasons why one rental site, Easyroommate.co.uk, claims it is expecting a rise in demand for renting from the private sector. And increased demand equals more money for landlords, as they can start to increase rents.

Money, money, money

However, it’s not all sweetness and light for landlords looking to add to their portfolios.

Inevitably, the problem boils down to money. While the buy-to-let sector has benefitted from the addition of a number of new mortgage lenders in recent months, including Kensington, Aldermore and Precise Mortgages, that has not necessarily made it any easier for them to get hold of funding for their purchases.

Paragon highlighted that of those landlords who had attempted to access funding in the second quarter of 2010, more than half (52%) said they had found it more difficult than before to secure finance.

According to the lender, part of this comes down to the criteria involved with many buy-to-let mortgages, as they are targeted at the small scale investor, and so professional landlords end up being excluded.

However, there are still plenty of fantastic landlord mortgages currently available, which I’ve detailed in the tables below.

Get some advice!

I’ve always been an advocate of independent mortgage advice, and when it comes to buy-to-let I think it’s even more crucial – this isn’t just your home we are talking about, but your livelihood as well!

Here at lovemoney.com we have an experienced mortgage team who can help with any query, large or small. So if you’re looking to add to your portfolio, or even considering taking your first steps as a professional landlord, be sure to head over to our mortgage centre where you can make the most of their advice, whether by email, on the phone or even via instant messager!

12 top BTL fixed rates

12 top BTL variable deals

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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 4045 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 will revert to the lender's standard variable 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.