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Landlords Looking for Better Deals From Loan Providers

A survey by one of the leading landlord organisations in the UK suggests that property investors are still looking to expand their portfolios but would like to see more competition in the mortgage market place.

The National Landlords Association (NLA) discovered that 9 out of 10 members would like to see more competition amongst loan companies, with 75% saying they would like lenders to be a little more innovative when it comes to packaging their products. It is little wonder that mortgage products raise such interest in the private residential letting market as almost three quarters of those questioned revealed they had loan obligations on their properties. The average buy-to-let investor had outstanding loans on 8 properties, with 1 in 5 of those saying they had taken landlord insurance out on new projects over the last 12 months.

David Salusbury, Chairman of the NLA, said the survey gave loan providers plenty to think about, saying “More than half of landlords surveyed do not believe that access to buy-to-let mortgages is getting any easier, with three in five agreeing that their individual circumstances as landlords are not being considered by buy-to-let lenders. Early signs of increasing property acquisition suggest that landlords are feeling more confident about future prospects of the buy-to-let market. However, while these findings are encouraging, some professional landlords, with more extensive portfolios, seem to be struggling to secure funds for additional expansion.”

The NLA reported little change in their Landlord Optimism Index but suggested that the majority of their members are treating the future with cautious optimism rather than being bullish about their prospects.

Landlords Taking up the Mortgage Slack

Buy-to-let mortgage providers and landlord insurance brokers are experiencing record levels of interest in their products as property investors continue to pour into the housing market.

Figures from a report by Paragon mortgages show that mortgage brokers allied to their products saw an increase in buy-to-let mortgages of over 35%, while brokers across the UK now say that 1 in 4 mortgages are taken out by prospective landlords. The figures show a remarkable change in the demographic of people taking out mortgages in the UK and really epitomise the rapid change in financial fortunes of the UK population.

Interestingly the figures also show that whilst professional landlords are taking advantage of better mortgage deals to either add to their portfolios or to re-mortgage on better terms, it is the first-time buy-to-let buyers who are really making their presence felt. According to Paragon there are twice as many first-time buy-to-let investors buying mortgage products than there was just four short years ago.

Managing Director of Paragon, John Heron, said, “The final quarter of 2011 was for many intermediaries a successful one, with increased optimism about the coming months and a steady improvement in the level of buy-to-let business being written. With record levels of rental demand being reported it is good to see that existing landlords are increasing the size of their portfolios but it is particularly notable that the proportion of new landlords is also increasing.”

The burgeoning property investment market has also seen buy-to-let insurance providers find innovative ways of marketing their products and just like mortgages the number of insurance options for landlords is now at a record high, with companies often offering special deals for customers who organize their cover online or over the phone.

Mortgage providers set to relax the criteria on buy to let loans

Better mortgage deals are at long last being offered to investors in the buy-to-let market, with one lender willing to provide a mortgage of up to 85% of the property’s value. This is the highest Loan to Value (LTV) figure made available to a landlord since the credit crunch started.

More lenders are looking to enter the buy-to-let market which may see an increase in competition in the sector and provide a better choice for property investors. The last few years have been very difficult for investors in the private housing sector. The financial crisis has seen many banks and building societies stop selling buy-to-let mortgages altogether, while others put their rates up so much that it made it almost impossible for landlords to make any kind of profit.

David Hollingworth, who works for a mortgage brokers, said “It has to be a welcome addition to the current range of buy to let products on the market and opens up options for those keen to invest without making such a big capital outlay required of many lenders. But more lenders need to get onboard, only a small hand full of providers are offering buy to let mortgages for those with less than a 20% deposit and it’s just not enough.”

The main problem for investors has been the amount of deposit required by lenders, many of whom were asking for upwards of a 35% deposit, making it virtually impossible for landlords to expand their portfolio and protect it with landlord insurance. However, with some lenders now offering a mortgage with an 85% LTV this means that landlords just need to find a more manageable 15% deposit. This is the best value deposit deal on a buy-to-let mortgage since the financial crisis began in 2007, and is great news for anyone looking to become a landlord for the first time.