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Landlords, are you a Buy-to-Let Mortgage Prisoner?
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Many landlords are stuck with lenders on less than competitive interest rates, or trapped on higher standard variable rates, making them virtual mortgage prisoners, according to The Mortgage Broker Ltd.
Landlords, are you a Buy-to-Let Mortgage Prisoner?
The nationwide broker is warning that landlords may feel like mortgage prisoners due to 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 mean that some lenders will also have to take into account a landlord’s other expenses, such as their tax status. As such, landlords must be aware of the new mortgage interest tax relief changes coming into force from 6th April 2017.
It will be on these stricter lending criteria that landlords will be assessed to see if they can afford to borrow.
The Managing Director of The Mortgage Broker Ltd, Darren Pescod, believes that many landlords do not fit the new standards.
He explains: “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 buy-to-let 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 that it will accept remortgage applications from selected intermediaries and its prestige partners, including The Mortgage Broker Ltd.
“This new move will increase the options available to landlords looking to remortgage, where they may be restricted by the Financial Conduct Authority rules for calculating mortgages for buy-to-let landlords,” believes Richard Norrington, the Chief Executive of Ipswich Building Society.
“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 have creditworthy buy-to-let borrowers who may be finding it hard to remortgage away from their existing lender.”
Landlords, do you consider yourself a mortgage prisoner?
