Buy to Let continues to grow
The popularity of the Buy to Let market shows little sign of slowing. According to the Council of Mortgage Lenders’ (CML) figures for July, lending to Buy to Let landlords saw an increase of nearly 12% on the previous month and 52% year on year.
Demand for good quality rental property remains high, particularly as first time buyers continue to grapple with the need to pull together substantial deposits. With low rates available on savings accounts, investors are attracted by the income that a Buy to Let property could generate after taking account of all running costs. In addition there is potential for capital growth if house prices rise over the longer term.
Any aspiring Buy to Let investors will typically need a deposit of 25% or more and will need to demonstrate that the rental income will be adequate to cover the mortgage interest by an adequate margin, typically 125%.
Bank of England Base Rate is currently at a record low and more lenders have entered the Buy to Let market in recent years, which has heightened the level of competition. As a consequence mortgage rates are very attractive at the moment.
The CML figures also highlight that it’s not just new landlords that have created the growth in Buy to Let but also existing investors remortgaging their properties. In fact remortgage lending for Buy to Let rose by 69% year on year.
Many landlords are reviewing their mortgage deal to see if they can cut the cost of their borrowing. There are plenty of options available but it’s crucial to shop around for the right all round deal, taking account of criteria and the fees involved as well as the initial rate.
Getting the right combination could make it possible to not only reduce the level of interest on the mortgage but also to lock into a rate and protect against any potential increase in Base Rate in the short to medium term.
Guild Mortgage Service, Provided by London & Country Mortgages
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The FCA does not regulate most Buy to let mortgages.