Buy to Let
More turning to buy-to-let investments
Many people are turning to buy-to-let as an alternative to traditional savings accounts, a broker in the sector has said.
With paltry rates offered on many savings accounts, many people are choosing to invest in property using buy-to-let mortgages to obtain higher returns.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said this was proving an attractive option and many mortgage deals were attractive for new investors.
“The buy-to-let market continues to attract investors fed up with poor returns on saving accounts,” he told Your Mortgage.
“With lenders reducing rates and loosening criteria, it is also getting easier to obtain a buy-to-let mortgage.”
He said would-be property investors needed to remember than larger deposits are typically required for buy-to-let deals.
“Typically, the deposit required on a buy-to-let mortgage is higher than on a residential deal with 25% the norm but there are deals available for those with just a 15% down payment.
“However, rates are higher the smaller the deposit you have. For those with a 40% deposit, two-year fixes are available from 2.25%. If you have a 25% deposit, expect to pay around 50 basis points more. For those with a 15% deposit, the rate rises to around 5%.
“Five-year fixes are available from 3.29% (40% deposit). However, this has a 2.5% fee. If you prefer a flat fee of £2,000, the rate increases to 3.49%.
“Variable rates are available from less than 2% for those with a 40% deposit. This increases by 50 basis points for those requiring 75% loan-to-value (LTV). Again, for those with a 15% deposit, the rate is around 5%.
He said most landlords opted for interest-only mortgages as the interest can be offset against the rental income for tax purposes.