Buy to Let is Booming as we become a Nation of Tenants.
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The average age of a first time buyer who doesn’t receive any help from parents or Government schemes is now 37 years old sadly. This is due to the large deposits that many first time buyers are forced to save to secure a mortgage now and it is having a significant impact on the number of private tenants as people are forced to rent for longer.
An increase in demand for rental accommodation is pushing rents up each month, with a 4.2% annual increase in average rental prices compared to last year. This overall statistic masks hotspots where the rate of increase has been very much higher and represents a significant increase in income for buy to let landlords, often beating the return that most savings accounts are currently offering.
This in turn is helping to increase borrowing for buy to let properties as many high street lenders are waking up to the idea that buy to let offers a positive return and a safe investment once again.
The mortgage advisers at ContractorFinancials have noticed a significant increase in the number of Contractors interested in investing in property or building on their existing buy to let portfolio’s and they now submit more buy to let borrowing than any other broker in their region according to a major lender.
With this level of expertise in this niche market you can be certain that they will be able to secure you a competitive rate but they will also be on hand with wider advice around your investments too.
Lenders race to get back in to the buy to let game.
ContractorFinancials currently have access to a number of competitive rates for Contractors looking to invest in property including an exceptionally low 2.74% variable rate on a 75% Loan to Value (LTV) from The Mortgage Works. However, with a rate this low, the arrangement fee is quite high at 3.5% of the mortgage value sadly. Alternatively, Birmingham Midshires have a 4.35% tracker mortgage with an arrangement fee of £2250 on a 75% LTV. If this arrangement fee is still a little high then you could opt for Natwest’s buy to let mortgage that has an arrangement fee of £999, although this pushes the variable rate up slightly higher to 5.79%.
Buy to let mortgages are calculated using the rental yield which usually needs to be 125% of the mortgage repayments based on a set rate by the lender. For example, The Mortgage Works are currently using a mortgage rate of 4.99% to calculate their buy to let mortgages so you will need to take this into account when calculating the rental income that you will receive.
With the excitement well and truly back in the housing market and many Contractors looking to move in the run up to the summer, we are optimistic that investing in property is firmly starting to make sense again.
To find out more about the range of mortgages available for contractors call 0845 062 8888 or email freestyleaccounting@contractorfinancials.com and speak to one of the experienced advisers.
