Buy-to-let mortgages costs stable

Buy-to-let mortgages costs stable

Buy-to-let mortgage costs have shown little movement in the past three months despite the changing market.

Mortgage Brain’s latest buy-to-let analysis found since the start of December the cost of three and five-year fixed rate mortgages has remained broadly flat.

While the cost of a 70 per cent loan to value three-year deal rose by 2 per cent, that of a five-year deal fell 1 per cent.

Similarly, the rate of a two-year tracker fell by 2 per cent in the period, creating a potential annualised saving of £126 on a £150,000 mortgage.

When compared with three years ago (March 2016), the cost of a 60 per cent LTV five-year fixed buy-to-let mortgage is now 11 per cent lower, while a 60 per cent LTV two and three-year fixed are 7 per cent and 10 per cent cheaper, respectively.

The steady market comes despite further changes to buy-to-let coming into force this year. For instance, landlord interest rate tax relief is to be cut further in April, and new restrictions on what landlords can charge tenants for will come into force in June.

Mark Lofthouse, CEO of Mortgage Brain, said: "Although our latest BTL product analysis shows little movement over the past three months, potential landlords and BTL investors can continue to make the most of the record lows in terms of rates and costs in the BTL market.

"With a host of new regulations and tax changes coming into play over the coming months, including the ongoing uncertainty surrounding Brexit and the potential for further base rate rises, the BTL landscape in 2019 is incredibly complex. The need for specialist advice and support from brokers, therefore, has never been greater."

The research also showed the cost of an 80 per cent LTV two-year fixed buy-to-let mortgage was on average 25 per cent higher than a similar residential mortgage as of March 1.

Similarly, an 80 per cent LTV five-year fixed BTL mortgage cost 19 per cent more than its residential equivalent, while a 60 per cent LTV two year BTL tracker cost 8 per cent more.

Daniel Bailey, principle at Middleton Finance, said: "There is still an appetite for buy-to-let lending and many of my clients are now looking at doing this through a limited company. 

"Although there has not been any significant movements in rates over the last 3 months rates remain extremely low.

"A number of lenders are offering free valuations and cash back incentives to borrowers. For many investors buy-to-let is still a good long term Investment."