News: BTL a safer bet

Mon, 14 May 07

Buy to let mortgages are now, in some cases, cheaper than homebuyer loans as lending to investors is seen as a safer, lower-risk, option by lenders...

Lenders offering cheaper deals include BM Solutions whose buy-to-let mortgage rate currently tracks 0.50% below Bank of England base rate for two years, according to Hamptons Mortgages.

Their equivalent mainstream residential mortgage tracks at 0.51%. Although this offers a better rate than the buy-to-let deal for the first two years, the fees are the same and there is a refund of some of the cost of valuation on the buy-to-let deal.

Figures from Hamptons Mortgages best-buy mortgage tracker revealed the continuing growth of buy-to-let in March. Investment property purchases increased 6% year on year (15.61% March 2007, 9.35% March 2006) as residential purchases decreased by the same amount (42.19% March 2007, 48.37% March 2006). An estimated 10% of all lending is for buy to let properties.

‘Buy-to-let has increased in popularity during recent years, but is only recently that lenders have tailored their mortgage offerings to target these buyers,’ said Jonathan Cornell , technical director of Hamptons Mortgages.

Greater affordability

‘Buy-to-let investors offer less of a risk than the traditionally sought after first time buyer, requiring lower loan to value mortgages and demonstrating greater affordability.

'The professional landlord with 10 or more properties in their portfolio is also an attractive proposition for lenders. These investors have greater experience and understanding of the market and have a diversity of properties within several locations should the market suffer any instability,’ said Cornell.

BM Solutions has buy-to-let loans at initial rates as low as 4.99% and Co-op at 5.09%, both below Bank Base Rate.


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