Grange Mortgage and Protection Service Ltd.

In this guest blog, we hear from Adam Smith, Director of Grange Mortgage and Protection Services Ltd:

With over 18 years of experience in the mortgage market, both in residential mortgages and buy-to-let, we are pleased to work with Brand Vaughan as their Financial Services partner.

At the start of 2023, we have seen some significant volatility in the interest rates available within the buy-to-let space, in an already challenging market. It is common that given the inherent risk, a lender would want a buy-to-let client to have their own home already (with a mortgage is fine). By way of initial deposit, most luy-to-let lenders in the UK will ask for a minimum 25% deposit, although sometimes 20%.

The complex nature of buy-to-let mortgages means that an experienced mortgage advisor is crucial to getting the best deals. With access to a much wider pool of lenders, you will find that you can save thousands of pounds by using a professional to navigate the buy-to-let market.

The good news is that the volatility in the market has recently negated, and lenders are taking a much more positive view of this specialist lending sector. Following the shockwaves that ran through the market after the mini budget in September last year. Pricing and criteria seem to be returning to more acceptable levels.

There are, however, still a number of major things to consider if you are looking at buy-to-let funding at the moment;

• Firstly, be aware that many of the most attractively priced deals will carry large arrangement fees and whilst lenders will suggest these can be added to the loan, wise investors should consider the impact of this.
• Secondly, we are seeing a larger number of ‘Green’ Deals on offer giving lower rates for properties with a higher rated EPC and given the requirements on you as a landlord these could well be worth considering.
• Thirdly, and perhaps the biggest issue in the market at the moment is the increase in the stress test rates that lenders use to ascertain maximum borrowing levels.

Many landlords agree that it’s a wise idea to ensure that, should rates rise, rental income will still cover the mortgage interest payments. Some of the stress test rates used by lenders, since the mini budget in September, have been much harder to pass.

Sadly, some landlords have been unable to refinance properties with even a strong rent being received. A feat made much easier with an experienced Mortgage Advisor in your corner.

For further information, please reach out to your letting agent, we’d be more than happy to introduce you to our expert advisors.