Good news for first-time landlords seeking mortgages


Everyone has to start somewhere, and the market can seem daunting for first-time landlords. But finding the right mortgage is a good place to start.

Buy-to-let mortgages have different criteria and requirements compared with a standard homeowner mortgage. For first-time landlords, there is a further niche of specialist mortgages available for their unique situation.

Across the buy-to-let mortgage space as a whole, product numbers have been steadily rising, which is great news for landlords. Interest rates also remain competitive for now, despite beginning to creep up off the back of recent Bank of England base rate rises.

But far from being a major challenge, new landlords looking to borrow to buy now have more choice than ever. Lenders are still keen to attract this borrower type, and the latest data shows that there is a wide range of products on the shelf – meaning fresh-faced property investors can spend more time focusing on their property search.

First-time landlords can take their pick

The latest analysis by Moneyfacts shows that there were 2,235 mortgage products available this month for first-time landlords. This is a significant increase from the 1,311 mortgage deals on the market in February 2021.

This level of product recovery echoes what has happened in the wider buy-to-let sector, observes Moneyfacts finance expert Eleanor Williams. There is even more on the market now than there was pre-pandemic, which shows that appetite is incredibly high in the UK buy-to-let market, and lenders are keen to capitalise on this.

The data also shows that 64% of the lender market caters for this specific borrower type, and this figure has held steady year-on-year.

A great time to invest in bricks and mortar

While it has been a difficult time for many over the past two years, the housing market has more than just stayed afloat; it has flourished. The same goes for the buy-to-let sector in many respects, with strong tenant demand.

Eleanor Williams adds: “The buy-to-let sector has faced its share of upheaval and changes to regulations and requirements in recent years, so it is highly encouraging to see that providers are still keen to attract first-time landlords (FTLs).

“Information from the Rightmove Rental Trends Tracker indicates that rents have risen at the fastest rate on record, while tenant demand has almost doubled.

“Perhaps understandably, some consumers may therefore be considering investing in bricks and mortar, especially while the returns available on standard savings accounts continue to fail to beat the rate of inflation.”

Secure a good rate now

Prospective first-time property investors sitting on the fence might be further enticed by the fact that, while interest rates are still competitive, they are on the rise.

For this niche area, the average two-year fixed rate mortgage sits at 3.19% as of February 2022. This is up from 3.10% a year ago, while in February 2020 the average was 2.80%.

On the other hand, if you’re keen to play the long game, the average five-year fixed rate is now 3.47% for first-time landlords. This is down compared to February 2021, when it was 3.66%, and only slightly higher than February 2020’s 3.31% average.7

Williams comments: “FTLs concerned about potential future rate rises may wish to consider locking into the mid-term stability that a five-year fixed rate product provides.”

Knowledge is power

Knowing all your options, assessing the risks and seeking professional advice is always likely to pay off for property investment newcomers. The same goes for experienced landlords, as things continue to change in the housing market.

“While providers seem to be working hard to cater deals for prospective landlords, those deciding whether this is the right time for them to join the BTL arena might be wise to secure the support of a qualified adviser in assessing their choices and to ensure they are informed regarding upcoming changes to the market and associated risks,” says Williams.

“Careful planning and seeking independent advice could be vital in establishing whether BTL is a viable investment opportunity for them.”

BuyAssociation has a wide range of property investment opportunities available in some of the strongest buy-to-let locations in the UK. Get in touch to find out more. 

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first-time landlords

Good news for first-time landlords seeking mortgages


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