Fewer mortgage deals for first-time landlords
Fewer mortgage products for first time landlords are available, new research from moneyfacts.co.uk suggests, but buy-to-let investment remains a good bet.
While the overall number of BTL mortgage products has risen, the availability of deals for first-time landlords has dropped by 5 per cent over the last 12 months.
Moneyfacts.co.uk finance expert, Charlotte Nelson, said: “Over the past few years, the number of BTL products on the market has increased but, despite this, new landlords have missed out on the BTL boom, as they now have a smaller percentage of the market to choose from, following a drop in availability of 13 per cent over just two years.
“This can be explained in part by the uncertainty that exists in the market at current, which has made some providers slightly more risk-averse.
"By their very nature, first time landlords lack experience in managing rental properties, and this is considered more of a risk now than perhaps it once was.”
She said the effects of tougher affordability rules, which reduce the amount landlords can potentially borrow, were now being felt in the market, with the average two-year fixed rate at 70 per cent loan-to-value (LTV) having risen by 0.14 per cent to 3.16 per cent since January.
"This could be disproportionately affecting first-time landlords, who may want to borrow at higher LTVs," she said.
Additional regulation means borrowers must face extra checks and questions about their finances.
Ms Nelson said: "So, any would-be landlords will need to do their homework and prepare in advance to ensure they can pass with flying colours and get the BTL mortgage they want.”
Despite the reduction in availability for first time landlords, she said deals 'have not been removed completely, and with savings rates remaining in dire straits, BTL still looks like a good option.'
However, she warned that anyone considering it should seek independent financial advice 'to see if this riskier option is the right choice for them'.