The return of offset buy-to-let mortgages could provide a welcome boost to landlords looking to avoid setting up a limited company structure, according to David Hollingworth of London & Country.
The recent launch of the Family Building Society’s offset buy-to-let mortgage sees a 2-year discount rate available to landlords looking to borrow up to 65% loan-to-value.
And Hollingworth (pictured) is hoping it is a success so other lenders start offering a similar product.
The L&C associate director of communications said: “I hope there is a decent response to it as if you get more product choice from other lenders that would open up a new option for landlords.
“Some lenders won’t have the capability to offer such a product, but if it shows promise it’s something you’d expect others to consider.”
But with the Family Building Society’s product Hollingworth feels some landlords could be put off by it being a standard variable rate – which reverts to 5.29% after two years.
Before the financial crisis the now defunct Bristol & West Building Society offered the product.
Hollingworth added: “In the past we found landlords like the idea of putting excess income in an offset account which builds up a fund for maintenance costs and the tax bill.
“It works a bit harder to reduce the interest cost which should appeal in this climate.
“We saw good takeup with the right combination of rate and functionality but if you have limited options with higher rates you would need to see a shift to get proper takeup.”