"After a strong performance in 2013, the buy-to-let mortgage market is likely to continue its trend for growth during 2014. The CML has predicted total mortgage lending of up to £195 billion this year, so if buy-to-let maintains its share at around 12%, this would lead to circa £23 billion of new buy-to-let lending.
This is certainly great news for landlords as it should result in greater competition between lenders in 2014, as they strive to meet their increased lending targets. We can therefore expect to see a wider choice of products for landlord clients, with lenders taking a more flexible approach to criteria, such as Kent Reliance removing its minimum income requirements, and we are likely to see other lenders relaxing their criteria during this year.
To achieve greater lending volumes, some lenders have expanded their core product ranges to meet the varying requirements of landlords, offering a whole suite of mortgages including fixed rate, variable rate, fixed fee, percentage fee and no fee options, as well as products with incentives such as a free valuation and free legals.
As lenders’ appetite for buy-to-let has increased, some have been taking a more innovative approach to product design in niche areas, such as offering refurbishment products and special buy-to-let mortgages for expats.
Property Hawk Mortgages is currently offering a unique buy-to-let equity withdrawal scheme with Castle Trust. It is an equity loan, secured via a second charge, of up to 20% of the property value and up to 85% LTV including the primary mortgage. With a maximum LTV of 85% and no stress test, an existing client at 70% LTV would be able to double the size of their portfolio using this scheme.
Kent Reliance has a number of 85% LTV buy-to-let mortgages available and it will be interesting to see whether other lenders decide to increase their lending limits in 2014.
Having the option to employ higher gearing in buy-to-let property investments gives landlords an excellent opportunity to expand their portfolios. For example, previously when most lenders would only lend up to 70% LTV, a landlord with £30,000 to invest would be able to purchase one property valued at £100,000. Today, the same landlord could purchase two £100,000 properties at 85% LTV, thus increasing their potential returns.
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