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Despite the recent launch of new mortgage rates and new terms for buy to let landlords, a new study shows that over three quarters of landlords believe that banks are not doing enough to support them. Just 17% of landlords feel they are getting enough support from lenders and one in ten have faced problems securing a buy to let mortgage, says the research from online letting agent PropertyLetByUs. The research also reveals that 87% of landlords believe the mortgage fees for buy to let loans are too high, while just 13% believe the interest rates are reasonable. This comes as figures show that over 70% of landlords have taken out a mortgage in the last six months to purchase a buy to let property and 19% have taken out a mortgage to refinance a loan. ‘Our research shows that lenders have some way to go to reassure landlords that they are supporting the buy to let sector. However, since the banking crisis of 2007, there has been a gradual increase in the availability of finance for buy to let landlords and the choice of mortgage products today is better than it has been for a long time,’ said Jane Morris, managing director of PropertyLetByUs. She explained that buy to let lenders typically want rent to cover 125% of the mortgage repayments and many are now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy to let mortgages also come with large arrangement fees. ‘Landlords need to be cautious with mortgage fees as they can substantially push up the cost of a mortgage, especially if landlords are only fixing, or tracking for a short deal period. The biggest fees are typically those charged as a percentage of the loan, but even flat fees can run to £2,000,’ said Morris. ‘There are currently some good buy to let mortgage products on the market. For example, the lowest rate available now is 2.2% from Principality Building Society. It comes with a £994 fee and requires a 40% deposit. The total cost on a £150,000 mortgage would be £7,594 for the deal term,’ she explained. ‘For a longer term deal, The Post Office has a five year fixed rate at 3.65% with a £995 fee for a 40%. A £150,000 mortgage would cost £28,370 over five years,’ she added. Continue reading →
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