If you are an inexperienced landlord planning to go in for a buy-to-let mortgage project, then probably you have some tough times ahead. The figure of buy-to-let mortgages has decreased considerably by a margin of 93% in the last year. This has left hundreds of landlords in lurch failing to get good deals.

According to the Daily Telegraph, the number of mortgages available now is 307 compared to 4,384 last year. Small time landlords will face the pinch as there is going to be a steep fall in buy-to-let loans and almost 110,000 landlords do not have enough properties to help them cover the blow they are going to face following a dip in the market rates. These novice landlords will also have to adjust to the higher rates of interest on the existing mortgage deals. The picture for buy-to let-mortgage rates isn’t very rosy either. The research done reveals that rate of buy-to-let mortgage has increased from 0.63 per cent to 7.46 per cent in the past year. So the higher interest rates mean that landlords will have to either increase rents or compensate the deficit themselves.

Lenders are too becoming strict with their rates. They have now set the rental income at 19 per cent higher than the monthly mortgage repayments which has increased from 13 per cent a year back to be eligible for a buy-to-let deal. With the market rates also on the rise, lenders also have to increase the rent by 15 percent to keep pace with the market trend. So it is not just a bad time for landlords but tenants and developers too must be ready for hard times ahead. According to Louise Cuming, in charge of mortgages of MoneySuperMarket states that it will be tough for landlords planning to remortgage buy-to-let properties as lenders would be expecting heavy deposits or increasing interest rates. So the time has arrived for landlords to do a rethink about their properties and whether they wish to stick on given the current scenario. Some landlords may be even forced to sell their properties at a loss. The Council of Mortgage Lenders reveals that there are about 1.1 million buy-to-let outstanding mortgages. Some shifted to lender’s standard variable rate (SVR) almost reluctantly as they had very little option left. Mortgage broker of Savills Private Finance, Melanie Bien said that many landlords have decided to stay with the SVR rather than pay a price of 2 to 2.5 per cent to move to an unspectacular rate. Since novice landlords neither have the extra cash nor a surplus of properties they have to depend on the savings to adjust the shortfall.

This entry was posted on Tuesday, August 12th, 2008 at 7:45 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.