Lenders offering new Products to Landlords

It’s not surprising that with the private rental sector doing so well a number of lenders are trying to cash in on their customers’ success. For many, the private rental sector is an extremely wise place to invest in at the moment, as a number of reports are suggesting that demand for private rented property will remain at a high level for the next few years at the very least.

However, as a landlord you should be wary of any special offers, as they can sometimes be too good to be true. While many people see the private rental sector as a good place to invest in, others see it as something to manipulate in order to make money unscrupulously. This is why PropertyQuoteDirect looks in more detail some of the newest products being offered to landlords:

75% loan to value Mortgages

As a landlord, you will already know that most banks require a large deposit in order to offer you a buy-to-let mortgage to protect themselves against the risks associated with letting a property. However, with the market doing so well lenders are offering more generous loan to value mortgages, and just today it was announced that Virgin Money is now offering a 75% loan to value mortgage product to their customers.

Discussing the decision, Virgin Money’s savings and mortgages director Peter Rogerson said: “We are delighted to launch our new range of 75% loan to value buy-to-let products, demonstrating the importance we place on this segment of the mortgage market. We reviewed our proposition after listening to feedback from our intermediary partners and believe the increase to 75% loan to value will improve choice for those looking for a buy-to-let product in the market today.”

Interest Free Loans

Castle Trust is another lender which has made the headlines today, as they are now offering landlords interest free loans up to twenty per cent of the equity of their properties. The only catch is that when a landlord choses to sell their properties they will have to give Castle Trust up to two per cent of the capital gains. The criteria for the loans stipulate that for every one per cent of the property that a landlord lends against, the bank will receive two per cent of the capital gains, meaning that they could easily make over a one hundred per cent profit.

Landlords who are debating taking advantage of Castle Trust’s loan should make sure they properly weigh up the pros and cons before signing on the dotted line. While it can be beneficial to those that want to invest in a new property yet don’t have the required amount for the deposit, fees or extra landlord insurance costs, if you are relying on your buy to let property as a nest-egg for your retirement it may be unwise to borrow this type of loan.

Five Year Fixed Rate Mortgages

Earlier this week Mark Carney, Governor of the Bank of England, announced that even though the bank is keeping the interest rate at 0.5 per cent for the foreseeable future, it is likely for it to go up to around 2.5 or even 3 per cent by 2017. The interest rate increase will be in-line with the UK’s economic growth, however there are still those that are concerned that it will make their mortgage repayments difficult to manage. This is why a number of banks are now offering five year fixed term buy to let mortgages, including Natwest where customers can now invest in either a 60 per cent LTV mortgage with a five year fixed interest rate of 3.99 per cent, or a 75 per cent LTV mortgage at 4.39 per cent.

Mark Bullard, head of sales at NatWest Intermediary Solutions, said: “Research we conducted at the turn of the year showed that brokers had enjoyed a good last quarter of 2013 for buy-to-let business and the vast majority were optimistic that they would see an increase in the amount of buy-to-let cases they will be writing this year. The launch of these two new 5-year deals is a direct response to feedback we received from many of our intermediary partners who informed us that there was a significant demand from landlords for longer term fixed rate deals.”

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