Landlord Mortgages
Landlord Mortgages | A Buy To Let Property Investors Guide
Landlord mortgages are on the rise, according to recent research. Figures published by Alliance and Leicester suggest that demand for landlord mortgages is increasing. These figures are supported by data from other lenders such as Paragon and by data from the Council of Mortgage Lenders, so the Alliance and Leicester figures provide a useful snapshot of the market.
It seems that with this lender at least as many landlord mortgages are for products under 75 per cent loan to value. These are primarily taken up by professional landlords who are able to provide much higher deposits than most first time landlords usually can. For first time landlords, a landlord mortgage is usually in the 85 per cent loan to value range, where these are available, as first time BTL landlords do not usually have large deposits. With professional landlords, however, the picture for landlord mortgages is different.
According to the lender's figures, applications for landlord mortgages have increased every month in the last half year, and professional landlords are paying far larger deposits than they need to in order to secure their BTL mortgage. According to Alliance and Leicester, the average deposit in November 2006 was 36 per cent of the property value, or £71,000. This figure is 44 per cent above what landlords actually need to spend to obtain a landlord mortgage.
BTL Payment Options
Landlord mortgages are available in a wide range of interest and repayment options. Most lenders' range of landlord mortgages include fixed rate, variable rate and tracker BTL mortgages and there are even some capped rate and offset BTL mortgages around. This means there is plenty of choice for landlords who are taking out a landlord mortgage. Alliance and Leicester's data shows that the professional landlords who are its customers are primarily choosing fixed rate landlord mortgages. Some 72 per cent of the products sold to landlords were two and three year fixed rate landlord mortgages.
The lender sees the buy to let mortgage market as buoyant and considers that continued demand for rented property will increase the entry of investor landlords into the market. Their figures show that the average BTL property purchase price is nearly £20,000 more than the equivalent in the residential sector.
The future looks good for buy to let mortgages, according to Alliance and Leicester. One reason for that, it says, is that the British people are obsessed by bricks and mortar (hence the expression 'safe as houses'). Property is popular because people get something tangible for their money, unlike stocks and shares, and can keep a sharp eye on any increase in their profits, something we are well used to doing with our own residential property.
Most pundits agree that the buy to let mortgage market has a bright future, at least in the short term. The number of buy to let loans is rising steadily and the value of buy to let property is also increasing. Lenders have responded to this by increasing their offerings, which means more landlord mortgages for professional investors to choose from.
