Brokers are getting ready for what looks set to be a significant number of landlords looking for remortgage deals ahead of the stamp duty anniversary.
April marks two years since the introduction of higher stamp duty rates and investors that rushed to buy ahead of the April 2016 introduction will soon be coming to the end of their two-year fixed deals.
Remortgage crunch as two-year fixed deals come to an end
In March 2016, a record £4.3bn mortgages were loaned, with 28,700 being advance loans. A high percentage of these will have been on two-year fixed rate deals. Since then, changes in the market have made buy-to-let mortgage deals harder for many landlords, as high street providers have tightened their lending criteria with more restrictive rent to borrowing ratios.
Changes to stress tests make high street borrowing harder
Landlords seeking a remortgage may find their high street provider less obliging than they were two years ago; choosing to work with a broker may be the best way to secure a new deal. The stress test changes implemented by lenders make the whole process more complicated; a specialist broker will do the research needed to get the best rate, accessing deals borrowers are unlikely to find on the high street.
Landlords completing tax returns are starting to see profits eroded
As well as the changes to lending criteria, landlords completing tax returns will start to see the effects of the partial withdrawal of the income tax relief. “The impact of this policy assault on individual buy-to-let has started to wash through the market. As new tax returns are filled in and fixed-term mortgages come up for renewal, many landlords are recognising that the sums no longer add up,” said Bricklane.com chief executive Simon Heawood.
Using a broker might ease the process and secure a better deal
Remortgaging has become significantly slower with the stricter underwriting criteria. Many smaller-scale landlords will need to provide more documentation and verified business accounts than before, as lenders conduct a thorough analysis of their portfolio.
While there is no clear answer to the mounting pressure on landlord incomes, seeking to refinance through a broker may mean a better chance of securing a new deal to protect their revenue stream. A skilled buy-to-let broker could be the answer for many buy-to-let landlords, in a significantly more sophisticated and complex lending market.
