Can investors still get into buy-to-let?
April 10th, 2011
The outlook seems bright for those considering looking to dip a toe in the property investment market as the continued shortage of good rental properties available and high tenant demand due to first-time buyers struggling to find the larger deposits required by many mortgage lenders, has meant that the current buoyant state of the rental market is likely to persist for some time.
Historically Buy-to-let mortgages have always come at a premium so for many balancing the income from the property against the expense of the mortgage has given them cause to steer clear of property investment, but with a growing rental demand come higher rents and rental income.
‘The good news is that, although buy-to-let lenders have tightened their criteria with higher deposits and rental cover calculations, rising rents make it is easier for landlords to meet these demands,’ says Melanie Bien, director at broker, Private Finance.
Steering clear of high street lenders and going through a specialist broker with access to ‘limited distribution’ mortgage deals, can uncover some gems. Mortgages for Business for example, is currently offering a 3.99% two-year discounted tracker in return for a 25% deposit, for all types of landlord.
Bear in mind however that, while fixed rate buy-to-let deals are available, they tend to be disproportionately expensive – and interest rate rises are looming large on the horizon. Credit Scoring requirements for the most competitive buy-to-let deals are also pegged high so it’s worth applying for a copy of your credit file through one of the credit reference agencies if you are in any doubt.