Despite reports of lower mortgage lending levels in March for both residential and buy-to-let mortgages, there was a 0.8% increase in buy-to-let remortgages on the previous year. Whilst recent tax and regulatory changes continue to have an impact on demand, lenders are upping the ante when it comes to competing for buy-to-let borrowers with a range of incentives.
Limited company deals
Capitalising on the increasing number of portfolio landlords who are making the switch to limited company status, Aldermore Bank has reduced rates for limited company landlords whilst
Kensington Mortgages have launched mortgages for limited company buy-to-let customers at LTVs (loan to value) up to 80%.
Kensington will only assess the property portfolio of the limited company and will be introducing a simpler process for portfolio verification. Craig McKinlay, sales and marketing director, said: “These latest changes to our mortgage proposition reinforces our commitment to a growing specialist lending market as we open up our range to new customers and provide more flexibility for borrowers with complex incomes”.
Reducing stress rates
Virgin Money has reduced its stress rate by 0.24% on its 5-year fixed buy to let loans to 5%. They will also consider using personal income to cover rent shortfalls between 100 and 145% of the mortgage payment, as long as landlords meet a minimum income requirement of £50,000.
New 5-year fixed rate deals
Landbay, Leeds Building Society, Lendinvest, Foundation Homeloans and Paragon Bank have all launched new 5-year fixed deals in response to many landlords seeking longer-term surety. Landbay rates will start at 3.49% and are available on standard residential as well as HMO/Multi units, and Leeds Build Society are offering 5-year fixed rates up to 60% LTV with rates starting at 2.19%.
Paragon Bank are including a free valuation and cashback up to £500 for portfolio landlords, and Accord mortgages have added an additional £250 cashback to 29 of their buy-to-let mortgage products.
Landlords should certainly be capitalising on the increased competition between lenders; in addition to the incentives above borrowers are also able to capitalise on offerings of increased LTVs, reduced rates on existing buy to let mortgage products and zero product, valuation or legal fees.
For landlords that have been biding their time to expand their portfolio or remortgage their current properties, the good news is that the subdued market has not restricted product availability and choice of lender.