New research from The Mortgage Broker Ltd has revealed that many landlords are stuck with lenders offering less than competitive interest rates.
In addition, many are faced with standard variable rates, which The Mortgage Broker Ltd feels is turning them into ‘mortgage prisoners.’
It is feared that landlords could feel trapped by the new affordability testing being undertaken by lenders. As such, some investors are suffering with expensive mortgage rates, which are hitting profits or even causing losses.
The new lending rules requires some lenders to take into account landlords’ expenses, such as taxes. This stricter lending criteria will be the benchmark on which landlords’ borrowing levels will be measured against.
Darren Pescod, Managing Director of The Mortgage Broker Ltd, noted: ‘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.’
Many lenders are tailoring their products to incorporate this tougher lending criteria for buy-to-let investors.
Pescod went on to note: ‘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.’
If you are a landlord worried about how the tougher lending criteria will impact on you, Just Landlords will continue to keep you up to date. You should also speak to an independent financial advisor to get further information.