Buy-to-let deals harder to come by

Mortgage deals of between 10% and 15% deposits, which used to make up some 61% of the buy-to-let market, have become a thing of the past.

[ClickPress, Thu Jan 15 2009] Mortgage deals of between 10% and 15% deposits, which used to make up some 61% of the buy-to-let market, have become a thing of the past. Over the past year, around 93% of all buy-to-let mortgage deals have disappeared, and, with the Post Office becoming the last lender to withdraw its 85% loan-to-value deal, landlords now have to put down a minimum 20% deposit. In reality, the number of those deals has plummeted as well, and at least a 30% deposit is needed to get the best deals.

This will be bad news especially for those landlords whose equity in their property has reduced, due to falling house prices, and who are looking to remortgage. With no deals available for less than a 20% deposit, many will have no choice but to move to the lender’s standard variable rate (SVR) when their existing deal comes to an end. And the cost of such loans may be steep, as not all lenders have passed on the recent rate cuts to their buy-to-let SVR as they have to their residential deals.

Michelle Slade of Moneyfacts.co.uk. said: “Despite a 4% drop in bank base rate since last year, landlords have seen little impact with the average fixed rate dropping just 0.03%. Tracker mortgages have come down but the average margin above base has increased to an astonishing 3.18%.”

Furthermore, the criteria for buy-to-let loans has also tightened, with lenders restricting the size of a landlord’s portfolio both in terms of number of properties and the maximum total advance.

However, for those landlords who are in a strong financial position, can get a mortgage, and will be able to rent the property at their required price, there are good buying opportunities to be had, and bargains will become more available as the year progresses.








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