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

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.

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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

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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 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.