Landlord blog
·Latest information about the rental property market
Buy-to-let borrowing rates in surprise drop
AFS Team·21 November 2013·3 min read
According to data, by the Halifax, deals are now available offering under three percent rates that beat the consumer residential mortgage deals. Virgin Money, for example, is offering a bespoke buy-to-let mortgage deal at a 2.8% fixed rate two year deal with a £1,995 fee. This is one of the industry's lowest buy-to-let mortgages.
However, as always with the curse of the small print, in order to be eligible for the deal, a deposit of upwards of 40% is expected. Additionally, the rent borrowers can expect from the property should generally be around the 125-130 per cent of the mortgage repayments.
One industry analyst argues: "Encouraging people to take out buy-to-let deals is a no-brainer for banks. The returns on buy-to-let mortgages are higher, with lenders able to charge interest at least one percentage point more than residential deals — however, the risks are the same."
However, the Halifax and Virgin Money claim the move will help resupply a dwindling supply of rental properties. That said, the wider issue, the Halifax concede, is a problem in the house building market - more properties are needed to help bolster the wider UK property stock.
