Recent Changes to Buy to Let Mortgages in the UK

Over the last few years the UK’s buy to let mortgage industry has grown nearly as popular with first-time investors as it was before the current economic crisis began. The result of this renewed popularity has been the launch of hundreds of new buy to let mortgages in the UK – a result that can only mean good times for investors.

Competition

With more and more mortgage providers now offering buy to let mortgages in the UK the competition for customers has really picked up. Attractive deals can be found everywhere and investors that may have been rejected this time last year are now being approved for their chosen buy to let mortgage.  

Some providers have also made big changes to the qualifying criteria for buy to let mortgages in the UK so that first time investors can quickly and easily get their foot on the rental property ladder.

The Biggest Changes

Two of the biggest changes recently made to buy to let mortgages in the UK are aimed at helping property investors to buy the properties they want, rather than those they can afford.

A reduction in the minimum deposit required

Until recently the vast majority of mortgage providers who were willing to approve buy to let mortgages in the UK would only offer a maximum of 60% loan to value. This meant that the investor needed to find the other 40% in the form of a cash deposit. So, for a £200,000 property the minimum deposit required would have been £80,000. Today however, some providers will lend as much as 75% loan to value and the occasional one will stretch to 80% if the borrower can prove they earn in excess of £50,000 per annum not including the rent they will receive from the property.

The option to add arrangement fees onto the amount borrowed

The arrangement fees for most buy to let mortgages in the UK stand at around £3000 – a considerable outlay for anyone in the current economic climate. Until quite recently these fees were generally required as an upfront payment but now it is often possible to add the cost of the fees on to the amount borrowed. Investors still need to pay solicitor’s fees and other expenses but they can now get away without having to shell out a few thousand pounds extra before they even start.

Of course not every mortgage provider has made these changes and there are still plenty of buy to let mortgages in the UK that require 40% deposit and the arrangement fees upfront. These mortgages often offer other incentives instead though and are still well worth looking at when searching for a mortgage deal.