As the stamp duty (STLD)holiday incentive comes to an end (stamp duty calculator), mortgage lenders are reportedly cutting interest rates for the UK’s buy-to-let investor market, as competition amongst lenders spreads past just the mainstream market of residential buyers, and mortgage interest rates begin to fall rapidly.
Last week it was announced that The Mortgage Works, Nationwide’s buy-to-let arm, were launching a 0.99 percent two-year fixed-rate deal for individual buy-to-let buyers, an offer that is not available to those who purchase through a limited company. Borrowers are to be charged a 2 percent arrangement fee, rather than the more traditional flat rate, which favours those seeking lower levels of funding.
At the end of September Platform, the Co-operative Bank’s mortgage broker lender, launched a 1 percent two-year deal for landlords for those looking to invest with a minimum deposit of 40 percent, and a £2,495 fee. Additionally, Gatehouse Bank, which provides sharia-compliant mortgages, reduced its rates this week by up to 0.45 percent on fixed-rate deals that are up to five years.
“The interest charged on buy-to-let mortgages is falling, with the average overall two-and five-year fixed rates dropping by 0.03% and 0.04% this month” – Eleanor Williams, finance expert at Moneyfacts.
With more and more lenders entering the mortgage market to offer competitive rates, the gap between buy-to-let mortgage rates and residential rates is narrowing. Historically, buy-to-let interest rates were higher than their residential counterparts, but the market has recently fragmented with the implemented tax and regulatory changes that favour the growth of landlords and professional portfolios. One of the most significant long-term tax changes that has prompted landlords to move to investing with a limited company structure, is the gradual phased removal of being able to deduct mortgage interest from their rental income, as property ownership within a limited company structure still provides this tax relief.
For more information on how you can benefit from the changes in the mortgage market, and to learn more about our current investment opportunities, get in touch with our expert property consultants today.