12 Mar 2021

Lenders still willing to provide mortgages to investors

Lenders still willing to provide mortgages to investors

Many mortgage providers are still willing to lend to new property investors, despite the economic uncertainty caused by Covid-19.

The percentage of deals available to first-time landlords in the buy-to-let market has actually increased over the last 12 months. There were more than 1,300 mortgages available to new landlords last month.

Eleanor Williams, a finance expert at Moneyfacts, said it was positive to note that, at 65%, the proportion of the buy-to-let market available to first-time landlords had grown by 4% year-on-year.

She added:

"Would-be investors have plenty of choice, and this is an indication that providers are committed to servicing this demographic of borrowers."

But mortgage rates have been on the way up.

The average first-time landlord two-year fix was 3.1% last month – a rise of 0.3% year-on-year. The typical five-year deal jumped to 3.66% from 3.31% during the same period. However, there are cheaper offers out there.

The lowest rate available in the first-time landlord chart currently stands at 1.64% fixed to March 31, 2023.

Meanwhile, Aberdein Considine has just relaunched its rent-guarantee insurance scheme for its fully-managed landlords. If the tenant fails to pay the rent, the policy will:

  • Pay the landlord the rent every month for 12 months or until the tenant leaves the property - whichever happens first.
  • Cover legal expenses up to £50,000 if tenants don't leave the property.
  • Pick up the costs of pursuing a tenant for the price of any repairs and damage the tenant has done.
  • Pay 50% of the rent value for up to three months after the tenant is evicted if the property is found to be damaged and needs to be refurbished.

The cost for this service is £25 + VAT per month for each tenancy.

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