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Landlords claim lack of bank support

Ryan Fowler

January 20, 2015

Just 17% of landlords feel they are getting enough support from lenders and one in ten landlords have faced problems securing a buy-to-let mortgage.

Additionally 87% of landlords believe the mortgage fees for buy-to-let loans are too high, while just 13% believe the interest rates are reasonable.

This comes at a time when over 70% of landlords surveyed have taken out a mortgage in the last six months to purchase a buy-to-let property and 19% have taken out a mortgage to refinance a loan.

Jane Morris, managing director of PropertyLetByUs, said: “Our research shows that lenders have some way to go to reassure landlords that they are supporting the buy-to-let sector.

“However, since the banking crisis of 2007, there has been a gradual increase in the availability of finance for buy-to-let landlords and the choice of mortgage products today is better than it has been for a long time.

“Buy-to-let lenders typically want rent to cover 125% of the mortgage repayments and many are now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy-to-let mortgages also come with large arrangement fees.

“Landlords need to be cautious with mortgage fees as they can substantially push up the cost of a mortgage, especially if landlords are only fixing, or tracking for a short deal period.

“The biggest fees are typically those charged as a percentage of the loan, but even flat fees can run to £2,000.

“There are currently some good buy-to-let mortgage products on the market. For example, the lowest rate available now is 2.2% from Principality Building Society. It comes with a £994 fee and requires a 40% deposit. The total cost on a £150,000 mortgage would be £7,594 for the deal term.

“For a longer term deal, The Post Office has a five-year fixed rate at 3.65% with a £995 fee for a 40%. A £150,000 mortgage would cost £28,370 over five years.”


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