Buy to let mortgage deals are now looking more profitable for landlords
While high rents and more favourable buy to let mortgage deals are tempting buyers back into becoming landlords, investors will need bigger deposits and find life tougher than in the pre-crisis boom years.
Many buy to let mortgage investors who bought in the property boom, struggled after the financial crisis. The trend however is beginning to reverse as lower house prices, rising rents and improving mortgage deals are tempting investors once more.
Existing investors should now be benefiting from lower rates as many will have switched on to their lender's standard variable rate. The slashing of base rate down to 0.5% has helped, especially as many buy to let deals do not have typical SVRs but a revert rate that tracks the bank rate.
New buy to let mortgage deals remain relatively expensive in comparison to residential deals and industry experts acknowledge that now is a tough time for buy to let. However with property prices falling to more affordable levels, those investors who invest for rental returns rather than capital growth, are tempted. At the moment rental income should be the key return for buy to let.
If investors are prepared to accept that the value of their property can slide in the short term, can ensure their property meets the buy to let mortgage criteria of at least 75 per cent to 85 per cent loan-to-value and can return 125 per cent of monthly mortgage payments, then now could be a good long-term investment. But, like any investment buy to let comes with no guarantees.
