ARE YOU A BUY-TO-LET MORTGAGE PRISONER?
Many landlords are saddled with lenders on less than competitive interest rates, or stuck on higher standard variable rates making them virtual mortgage prisoners, according to The Mortgage Broker Ltd, a nationwide broker providing mortgages to buy-to-let landlords and investors.
Landlords may feel imprisoned by the new ‘affordability’ testing, which is being undertaken by lenders. As a result, some landlords are suffering expensive mortgage rates, which are eating into their profits each month, or even forcing them into a loss. The new lending rules means some lenders will have to take into account a landlord's other expenses such as their tax status. It will be on this stricter lending that landlords will be assessed to see if they can afford to borrow.
According to Darren Pescod, Managing Director of The Mortgage Broker Ltd, often landlords do not fit this new lending criteria. He comments: “Britain's two million landlords are facing assaults from both the taxman and the Bank of England. The mortgage restrictions are very bad for landlords and pose a major threat to BTL investments. If landlord mortgages are tougher to secure, buy-to-let landlords could find themselves stuck on expensive rates indefinitely.
“Thankfully, the Ipswich Building Society has returned to the mortgage market with two new buy–to-let products, specifically aimed at buy-to-let prisoners or ‘misfits’. The good news is that the lender will only assess rental income at 125% of the mortgage pay rate. Ipswich
Building Society has also confirmed it will accept remortgage applications from selected intermediaries and its prestige partners, of which The Mortgage Broker Ltd is one.
“This new move will increase the options available to landlords looking to remortgage, where they may be restricted by the FCA rules for calculating mortgages for buy-to-let landlords.”
Richard Norrington, Chief Executive, Ipswich Building Society commented: “We continue to provide choice in the marketplace for mortgage misfits and those who may not fit a ‘one size fits all’ assessment. By employing a manual approach to underwriting, with consideration of each application based on individual circumstances, this new initiative will help creditworthy buy-to-let borrowers who may be finding it hard to remortgage away from their existing lender.”