The Residential Landlord Association in its May 2018 market update report has revealed that many lenders have changed their commercial mortgage products to make them more appealing.
Some lenders use stress tests to assess the affordability of mortgages. These are typically 5.5%, which means that rental payments must cover mortgage repayments if interest rates rose to 5.5%. Some lenders have reduced this percentage to 5% and will also consider other income that the landlord receives as well as rents.A few lenders have reduced interest rates on selected products. For example, one lender has rates starting at 3.69% for 80% loan-to-value mortgages.
Many lenders will only lend 65% of the purchase price of a house of multiple occupancy (HMO), but this has been increased to 75% by some lenders.
There are more cashback deals available with lenders offering between £250 and £500. Lenders may combine cashback offers with free valuations. Some lenders offer to play the legal fees.
Many of these deals have terms and conditions that make them unavailable in certain circumstances. For example, some mortgage deals are only available for fixed rate mortgages or remortgaging.
With so many offers available with varying interest rates, availability and conditions, it can difficult for landlords to find the best deals. This is why it pays to go to a mortgage broker who is up to date with all the latest deals. They examine each loan application in detail to find the best deal suitable for landlords.
