Mortgages 

Landlords rely on brokers for better deals

Landlords rely on brokers for better deals

Landlords rely on brokers to guide their financial choices because they feel intermediaries have access to better deals, according to research by a bridging lender.

In a survey of 2,000 adults who own three or more residential properties, 35 per cent agreed they rely on brokers to inform choices made when securing finance for a property purchase.

The research, conducted by bridging lender Market Financial Solutions, found 41 per cent of the landlords who relied on brokers felt they could access better rates than a borrower going direct with the lender.

Paresh Raja, chief executive of Market Financial Solutions, said: "Whether it is someone purchasing their first house or their 50th, this research shows how instrumental brokers are in guiding property buyers through the financial options available to them."

Recent figures released by fintech firm Mortgage Brain found a significant difference between the cost of comparable buy-to-let mortgages and mainstream residential products.

As of November 1, the cost of a five-year fixed buy-to-let mortgage at 80 per cent loan-to-value (LTV) was 24 per cent more than the same product type for a residential mortgage.

A two-year fixed buy-to-let mortgage at 80 per cent LTV cost 20 per cent more than its residential equivalent.

The survey of landlords with a portfolio of three or more properties also found a preference to explore financing outside of traditional mortgage products, with 41 per cent expressing a want for a better understanding of the options available to them. 

Mr Raja said: "Importantly, beyond the historically dominant mortgage providers, there are now many forms of alternative finance that buyers can call upon.

"And property investors are clearly keen to explore options outside of mortgages that might be better suited to their particular circumstance."

Mr Raja said with more than a third of landlords relying on brokers, it is vital intermediaries have in-depth knowledge of all financing options and not just different rates for the same product. 

Steve Olejnik, managing director at Mortgages for Business, said he thought the number of respondent landlords using brokers to guide financial decisions in the survey was surprisingly low. 

He said: "In my experience nearly all buy-to-let mortgage business is done via intermediary channels.

"But there will be landlords who purchase in cash and therefore don't require finance - I would think therefore that those not going to a broker are predominately cash buyers."

Mr Olejnik said brokers are becoming increasingly important in filling the advice gap.

He said: "In a buy-to-let environment more complex than ever, landlords really do need broker advice to find the right product."

rachel.addison@ft.com

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