Mainstream Buy to let mortgage lenders are changing their products and lending policies as they prepare for the new rules to be implemented that will tighten up on the necessary criteria borrowers must meet, causing a stir in the market.
The Co-Op Bank announced this week that it was scrapping residential “Interest Only” mortgage products but the lender has confirmed that landlords can still obtain interest-only mortgage loans for the purchase of buy to let rental properties.
Platform will continue to offer interest only mortgages for the purposes of purchase and refinance for landlords, but has pulled all similar products for residential homeowners offered through the Co-Op, Platform and Britannia.
LloydsTSB also withdrew “Interest Only” residential home loans but similar “Interest Only” Buy-To-Let mortgage products for landlords will remain in place for the foreseeable future.
LloydsTSB have said that they intend to reduce loan exposure by cutting all UK mortgage lending by 3% stating that borrowing costs on the wholesale money markets were too high.
Instead, LloydsTSB want to raise more cash from their own savers to underwrite all forms of lending and want to raise deposits by 3% .
Banks, building societies and mainstream mortgage lenders tend to view the UK buy to let market as a business with rent from tenants used to underwrite interest payments and long-term capital appreciation, as the property increases in value, is accepted as a suitable repayment method.
Landlords can utilise Rent Guarantee insurance from specialist landlord service providers to ensure that their rental income remains uninterrupted and they can cover their Buy To Let mortgage payments.
Property investors and landlords don’t need to panic and should shop around for the best deal on the market. However, meeting the increased criteria could prove too much for some investors and they may be forced to seek alternative vehicles for finance or use alternative investment strategies such as Lease Options to control property.
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