Despite the introduction of legislation designed to limit the tax relief landlords are able to claim on their mortgage interest, a recent report from Moneyfacts.co.uk revealed that the number of options for first time landlords has actually increased by 13% since the beginning of the year, while rates have steadily decreased over the last two years. In fact, this report indicates mortgage applications for first time landlords has doubled since last year.
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 July 2016 there were 929 first time landlord products available and the average 2-year fixed rate for this market was 3.19%.
Fast-forward to July 2018 where there are now 1,268 mortgage products available – a record high – and an average 2-year fixed rate of 2.83%. However, this may all change following the recent Bank of England base rate increase.
The power is in the hands of the landlords
The surge in popularity may be attributed to mortgage providers understanding that many of their current customers could seek a better deal with another lender once the terms of their current deal are up.
To prevent this, they’ve been improving their offerings and attempting to extend their reach into new markets.
Coupled with the fact that savings account rates are so low and rates for first time landlord mortgages have consistently declined, it’s no wonder buy-to-let mortgages have become “hot properties.”
It’s not all good news
While there are certain upsides to these products, we would be remiss not to mention the downsides to first time landlord mortgages as well.
The legislation on tax law not only limited relief, it also introduced stricter borrowing criteria and increased scrutiny on the borrower’s financials. Moreover, success is not guaranteed with buy-to-let properties and there is a lot of work that comes with managing a property.
But if you’re interested in becoming a first time landlord, now’s the time and we can help.
- We have covered how to build a successful buy-to-let business
- We’ve provided tips for buy-to-let investors (part 1, part 2)
- Read more about how changes in tax law will have an effect on landlords.
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We specialise in working with borrowers seeking a buy-to-let mortgage and first time buyers, so we’re well-versed in helping first-time landlords realise their property dreams.
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