Understanding both sides of the buy to let mortgage coin.

The buy to let mortgage market has undergone radical changes in recent months. 

Since Jan 1st this year, new, more stringent affordability rules have come into force and lenders were advised to raise their rental income value stipulation to 145%, up from 125%. They were also advised to apply an interest rate stress test of 5.5%, to make certain landlords could survive a sudden hike in interest rates.

Some lenders, however, have set their own rental value income criteria at 140% or, if the RVI has remained at 145%, they stress test at a lower interest rate. While some could view this as evidence of lenders’ supporting landlords, others argue that landlords could be left exposed over the longer term.

Today, a 5 year fix might seem like the best option. However, with so much uncertainty, a 2 or 3 year fixed rate buy to let mortgage could offer you more flexibility. 

Calculating affordability and risk can be a daunting prospect, even for an experienced landlord. To make certain you are getting the best deal, and reduce the risk of making a costly mistake, contact one of our buy to let mortgage experts at Deal Direct. 

Please be aware, however, that we are regulated to offer independent mortgage advice and are not regulated to offer general financial advice. If you want to discuss the suitability of property as an investment, you will need to contact an independent financial adviser.

Please note that buy to let mortgage applications from:

• applicants whose intention is to benefit from house price growth
• applicants whose intention is to benefit from rental income
• applicants who are letting to buy will be treated as normal buy to let and not as a consumer buy to let. In addition, their subsequent remortgage applications will also be treated in the same manner.

To compare buy to let mortgage deals and discuss their potential impact, short or long term, consult Deal Direct. 

Call 0800 048 8828 today.