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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Struggling to get a decent rate!
I am looking at remortgaging at the moment on my buy-to-let property and I am not sure if it’s just me – and there’s something wrong with my credit file – but rates appear to be much higher than they used to be!
I was under the impression they would be low but they seem to have creeped up since the pandemic. Is there anything I can do to get a better rate or do I just need the market to calm down a bit? Are most other landlords experiencing this?
Answer
Currently, buy-to-let mortgage rates start from around 1.19% and top out at about 5.5% – I’m guessing you’re not being offered the former as most landlords would consider this very low!
It’s difficult to answer this question without knowing more about your circumstances and the property in question; however, what I can say is that mortgage rates have generally increased over the last few months.
The reason for this is that lenders are trying to manage their workload and service levels, and the easiest way to prevent lots of new applications is to put prices up.
As the market has started to calm down (the closer we get to the stamp duty deadline), we are beginning to see lenders bring prices back down. That said, there are many factors which impact lender pricing, not just the volume of applications they have, so I would recommend keeping a weather eye on the market or speaking to a broker so you can pick your perfect time.
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Question
New build property – can these be purchased by landlords?
I would like to purchase a new build property to let out but I wondered whether there might be restrictions on getting a mortgage for such a home.
This is my first buy-to-let purchase, although I do own my own house with my wife. I have around 30% deposit to put down and the property in question would be on a new build estate with about 40 other properties in an area which tends to generate good yield. I know there can sometimes be issues with snagging etc which can come up and therefore I wondered if lenders were reluctant to offer finance on new homes.
Thanks for your advice.
Answer
This is an excellent and valid question. Indeed, post-credit crisis, a lot of lenders were nervous about lending on new builds. Thankfully, this sentiment has mostly passed, and the majority of lenders will happily accept new builds properties.
There is a minority who restrict the maximum loan-to-values available for this property type, but there’s definitely a lot of competitive choice in the market. A good broker will be able to source you the right lender.
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Question
What’s the maximum age for a landlord?
Like many people approaching retirement I am getting a bit worried about whether my pension will cover all the adventures I have planned in my latter years. Therefore I have been considering very seriously renting a property to tenants.
I am 62 and own my current home outright. I have a bit of money in savings which would probably make a nice deposit on a buy-to-let. However, I am a little concerned I may be too old to get a buy-to-let mortgage at this stage.
I would love to know your thoughts and, also, any tips on becoming a landlord in later life.
Answer
Trust me, in the buy-to-let world, 62 makes you a spring chicken! A lot of lenders don’t even have a maximum age now, as it’s widely accepted that buy-to-let investment is often an additional pension scheme for many.
In terms of investment tips, you first need to consider whether you’re looking to achieve income or capital growth with your investment; this will determine the type of property you choose.
Secondly, do your research on the area: infrastructure investment, employment, unemployment and saturation of rental properties. These factors will impact how your investment performs in terms of property value and rental income.
My third piece of advice is that if possible invest in an area you know well. Good luck and I hope you enjoy what sounds to be a fabulous retirement!
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Question
Using buy-to-let as a property ladder springboard
I am not sure if this is possible – hence why I am asking – but I wondered whether I might be able to help my daughter progress onto the property ladder by supporting her as a buy-to-let landlord.
There are a few reasons we wanted to take this route. It is partly as I have always wanted to get into property investment. However, the other is that house prices in the place my daughter actually wants to live – ie London, near us – are so ridiculously high we wondered if purchasing in a cheaper more distant area would make sense.
We hoped we could be ‘joint landlords’, I would put down the deposit, and my daughter and I would share the income. Would this be possible if she is a first-time buyer?
Answer
It’s wonderful to hear that you’re looking at alternative ways of helping your daughter onto the property ladder, and not just focusing on homeownership in the true sense of the word.
In terms of getting a mortgage as co-investors, it should certainly be possible even though she’s a first-time buyer.
What I will point out is that your daughter will lose her first-time buyer status when it comes to stamp duty on this purchase, meaning she will need to pay stamp duty when she buys her own home.
If this is something you’d like to avoid, I would recommend seeking professional tax advice to see whether there are other options, for example investing via a limited company structure.
I hope that has helped and that you succeed!
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