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Long Term Loans For Landlords Means They Can Borrow More

With everything from tax regulations to interest rate hikes seemingly going against landlords lately, it’s about time for some good news. Towards the end of last year, The Mortgage Works, (part of Nationwide) one of the country’s biggest buy-to-let lenders, amended their guidelines to let landlords borrow significantly more money if they sign up for a long term loan.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

In an attempt to rally the troops and inject the buy-to-let mortgage market with some activity, The Mortgage Works promises a lower “stress rate” for potential landlords willing to take out a fixed rate deal for a 10 year period.

In fact, the rate has dropped almost a whole percentage – from 4.99% down to 4%.

This, along with the interest rate cover ratio are part of the buy-to-let affordability test, which determines whether a potential borrower could afford their proposed mortgage.

Of course, the exact amount of your loan is determined by multiple factors, including your tax band, and every lender will have different loan estimates.

For example, if a basic-rate taxpayer nets £1,500 per month from their rental property, the amount they could borrow increases from £285,577 to £360,000. For higher-rate taxpayers, the amount they can borrow increases from £248,773 to £310,344.

This is all part of a broader plan to spark a resurgence in the market, along with lower rates and lightened terms. With new investors circling the market, the banks have kicked up the competition to win new business, which has been hard to come by recently. Near the end of 2018, a UK Finance report detailed a 9% drop in new buy-to-let mortgages, but a surprising 5.4% growth in remortgages.

The downside to longer term deals

Remortgaging remains a potential downside to locking in a 10-year fixed rate deal. By signing on to such long terms, you are securing a moderately good rate and repayment amount, which will help provide long term stability in any landlord’s budget.

But you limit the opportunity that a shorter term deal offers when the loan period is up – to remortgage and possibly secure a better rate without having to worry about costly exit fees should the rates drop to an even more favourable level during the life of your loan.

Speak to the team at Dental & Medical Financial Services

If this news makes you interested in pursuing a buy-to-let property or increasing your property portfolio, get in touch with us today. We can help prepare your finances for your new business venture and help you get started on the journey.

Are you a landlord looking to secure a  mortgage?
Mortgages | Buy to Let | Property | Mortgage Planning |

Dental & Medical Financial Services have been helping doctors and dentists with finding low-cost mortgages for your home and investment properties for over 25 years. Call Chris to discuss your options.

Tel: 01403 780 770


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