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New buy-to-let mortgages could be the answer for landlords

Buy-to-let landlords could benefit from a new five-year fixed-rate mortgage deal launched by TMW, while other lenders are also stepping in to offer more competitive rates to buy-to-let landlords and investors.

Part of the Nationwide Building Society Group, TMW’s new 1.99% fixed-rate has gone straight to the top of the best-buys list for landlords. And it’s not just TMW offering enticing options to landlords – independent mortgage market monitor Moneyfacts has stated that some buy-to-let mortgage rates have gone back to record lows.

Landlords are currently at the mercy of the new stricter lending criteria rules, with lenders assessing the affordability not only on the current interest rate but also if rates increase to 5.5%. This stress-test has resulted in many landlords struggling to secure remortgage deals for existing rental properties and prevented new property purchases.

Longer term deals can avoid the stricter affordability stress testing

However, landlords will be pleased to discover that five-year fixed rate deals can avert these stricter affordability tests, as lenders do not need to apply the 5.5% rate if the deal is for five years or longer. Lender policies do vary, but they can choose the rate at which they assess affordability for products taken over longer periods.

The TMW five-year 1.99% fixed-rate deal does come with its conditions; a £1,995 fee and a minimum 50% deposit to secure this impressive low rate. For landlords averse to paying large fees for the privilege of low rates, a fee-free product is available at a higher rate of 2.39%.

Increasing competition to offer lower rates and longer-terms

Given the current climate in the buy-to-let market, any move by lenders to help landlords manage their costs and cash flow will be welcomed. Masthaven has just launched a buy-to-let mortgage range available exclusively through brokers. Their new product offering will be available for purchases and remortgages, with two- and five-year fixed rate options at 70-75% LTV and rates starting from 3.44%, with a maximum portfolio limit of eight properties and £2,000,000.
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Matt Andrews, managing director of mortgages at Masthaven, said: “The buy-to-let changes have been talked about a lot but the most important thing is brokers and lenders become comfortable with all the legislation changes and make sure they make all the right decisions and give customers good tax advice. We’re offering all these solutions.”

Newcastle Building Society has slashed its buy-to-let rates with significant cuts to its five-year fixed range. A five-year fixed rate remortgage deal is available for 3.25%, with a £999 fee. Steve Carruthers, head of mortgage distribution at Newcastle Intermediaries, said: “We know that while the purchase market has shrunk over recent years our remortgage exclusive product will be popular for existing investors looking for long-term rate security.”

According to Moneyfacts, the average five-year fixed rate for a buy-to-let mortgage has fallen to 3.43% – equalling its lowest ever rate. It seems the price war for longer term fixed-rate buy-to-let mortgages is just getting started, which can only be good news for buy-to-let investors right now.

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