Finding the best Buy To Let Deals

Buy To Let

Figures from the Bank of England show that there were 51,098 mortgage approvals in May worth £7.6 billion, the lowest figure since March. Such figures point to households opting to inject more money into the housing market than they are taking out, by way of mortgage repayments and deposits.

CML chief economist Bob Pannell said: “Weaker mortgage lending in June points to a more subdued tone for the housing market in line with that for the wider economy.”

Lenders have been raising their rates in recent months, pointing the blame at the higher costs of funding mortgages, meaning that embattled first-time buyers are facing even bigger obstacles to finding their way onto the property ladder. Landlords are the only ones finding the current housing market to their liking.

Although buy-to-let loans have increased in recent months, landlords are still able to receive mortgage deals below 4%, a sign of the banks’ attraction to the buy-to-let sector.

HSBC have recently made waves with the launching of a five-year fixed-rate mortgage at 2.99%, a seven-year fixed at 3.99% and new tracker and discount mortgages. The bank claims this deal is the lowest ever five-year fixed rate available, but require a hefty arrangement fee costing £1,499 and a 40% deposit.

Buy To Let MortgageThey have taken a similar tack in the buy-to-let market, offering attractive rates beginning at 4.29%, but requiring 35% deposits and £1,500 booking fees in return.

First Direct are offering an initial 2.79% variable rate, charging 2.29% above the base rate for the term of the mortgage. With a £999 fee, a 35% is required. However, there is no early repayment charge payable.

Thirty-five per cent is about the limit at which deals get competitive, with Northern Rock bucking the trend with a 4.65% three-year fixed-rate offering with just 30% up front. Any less money up front, and rates seem guaranteed to rise over the 5% mark quickly.

Moving away from the fixed rate may be the best bet for landlords who can cope with any unexpected rises in the base rate, with Coventry and the Bank of China offering trackers at 3.15% and 3.38% above base, though both expecting pricey arrangement fees for the privilege.

Yields before costs, like landlord insurance have risen to 5.2 per cent, reflecting a rise in the perceived risk in the market and, certainly, the high deposits being demanded are a sign that banks are not willing to gamble with their money, leaving first-time landlords (or at least those without major capital) in a bind.

Currently, more landlords are interested in purchasing three or four-bedroom houses, proving to be increasingly popular with families who are renting. This has created a whole new market for buy-to-let, and is particularly limited on supply.

Multiple-occupation housing – where more than three adults are living in the same house — is also proving to be very popular especially in cities such as London, where sky high rentals are driving the demand in this particular sector of the market.

 

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