Mortgages  

Aldermore target landlords with BTL fixes

Aldermore Bank has unveiled a pair of limited edition five-year fixes for landlords with a 30 per cent and 35 per cent deposit.

The products at 70 per cent LTV and 75 per cent LTV are priced at 3.18 per cent (for loans up to £1m), and 3.25 per cent (for loans up to £600,000).

The deals are available for buy-to-let mortgages on single residential units from £25k up to £1m. In addition, the mortgages are available for both for purchase and remortgage, with a completion fee of 1.5 per cent and a booking fee of £199.

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In August the challenger bank announced its standard variable mortgage rate will be reduced by 0.25 of a percentage point to reflect the Bank of England base rate cut by the same percentage from 0.5 per cent.

The lender’s SVR is due to be lowered from 4.98 per cent to 4.73 per cent for both new and existing customers on 1 September 2016.

In June, the lender added to its standard buy-to-let range with the launch of a separate limited edition five-year fixes at 3.25 per cent at u[p to 80 per cent LTV.

Provider view

Charles Haresnape, Aldermore’s Group Managing Director, Mortgages, said: “In spite of a number of changes across the industry, we continue to see strong growth in the buy-to-let sector. The rush to beat the stamp duty deadline meant that there were 8 per cent more new properties advertised to rent in the second quarter of this year when compared to the year earlier, and the underlying fundamentals of the buy-to-let market remain strong.

“As a specialist lender, we understand the needs of our customers. Through the changes we’ve made today we will continue to support landlords by updating our product range to suit them.”

Adviser view

Phil Frapple, director and IFA at Somerset based Nexus IFA, said: “Both products are quite good. A lot of borrowers would benefit from knowing how much they are expected to pay back every month for five years. Many of the guys here at our office have used Aldermore in the past and have had no issues with them. Aldermore has a simple underwriting process and seem to be happy to take on unusual cases.”

“House prices have remained fairly constant despite the increase in buy-to-let stamp duty. To put it simply, house prices are unlikely to decrease drastically because we are suffering from an under supply in property.

“The buy-to-let market place is more regulated than it has been in the past but more people are using buy-to-lets as a long term investment vehicle to supplement their income.”

Charges

A completion fee of 1.5 per cent and a booking fee of £199.

Verdict

A five-year buy-to-let fix adds a degree of certainty when it comes to monthly repayments amid an uncertain outlook for the sector in post-Brexit Britain. However, landlords face a significant headwind in the form of the abolition of tax relief on mortgage interest. Until the supply for properties satisfies the demand, it is difficult to envisage the property bubble bursting at any point in the near future. People are likely to continue to invest in property, especially given the uncertain stock markets.