Buy-to-let mortgage choice improving for landlords: has become the time to invest in property?
Landlords now have more mortgage options than at any point because the start of pandemic, because the rental market kicks into life.
Property investors have experienced a lot more than 200 new deals launched in the last month, and new data shows rental demand is booming significantly.
Here, we analyse the very best rates currently available on buy-to-let mortgages, and explain the standards which means that now may well be a great time to take a position.
Mortgage options for landlords around the rise
The pandemic were built with a significant effect on the quantity of mortgage deals open to landlords, but there are signs that things are getting back to normal.
Landlords now have 2,709 mortgages to choose from, using more than 200 new deals developing towards the market in the past month.
This influx of offers has seen average rates begin to drop. The present averages are now less than those recorded in July 2021, meaning landlords visiting the end of two-year fixes could possibly remortgage to some cheaper rate.
The chart below shows what’s became of buy-to-let home loan rates because the start of the Covid-19 outbreak.
Low-deposit mortgages are finally getting cheaper
Overall, buy-to-let rates went down throughout the first lockdown, as lenders withdrew the majority of the ‘riskier’ deals (those at 75% or 80% loan-to-value).
In recent years months, however, deals at 80% loan-to-value (LTV) have begun returning, finally handing a lift to borrowers with smaller deposits.
When we last crunched the numbers in April, 80% LTV mortgages were 0.58% (two-year fix) and 0.31% (five-year fix) more costly than before the pandemic, but the influx of recent deals has seen this gap cut to simply 0.38% and 0.17% respectively.
| Type of mortgage | Average rate (March 2021) | Average rate (July 2021) | Change |
| Two-year fix (60% loan-to-value) | 1.89% | 2.25% | +0.36% |
| Five-year fix (60% loan-to-value) | 2.31% | 2.62% | +0.31% |
| Two-year fix (80% loan-to-value) | 3.56% | 3.94% | +0.38% |
| Five-year fix (80% loan-to-value) | 3.98% | 4.15% | +0.17% |
Best rates on buy-to-let mortgages
Looking at average rates provides for us an over-all idea of what’s happening in the market, but when you’re taking out a home loan you’ll want to get the cheapest deal you possibly can.
The tables below show the cheapest initial rates currently available on two and five-year fixed-rate buy-to-let mortgages.
The cheapest deals all come with substantial upfront costs with a minimum of lb1,499. The Mortgage Works offers the best rates, but charges 2% of the mortgage advance rather than a flat upfront fee.
This is an illustration of why it’s vital that you consider the overall cost of the mortgage rather than focusing solely on the initial rate when you compare deals.
Two-year fixes
| Loan-to-value | Lender | Initial rate | Revert rate | Fees |
| 60% | The Mortgage Works | 1.19% | 4.74% | 2% from the mortgage advance |
| 75% | Santander | 1.52% | 3.35% | lb1,499 |
| 80% | The Mortgage Works* | 2.49% | 5.54% | 2% from the mortgage advance |
Five-year fixes
| Loan-to-value | Lender | Initial rate | Revert rate | Fees |
| 60% | The Mortgage Works | 1.64% | 4.74% | 2% from the mortgage advance |
| 75% | Santander | 1.97% | 4.44% | lb1,499 |
| 80% | The Mortgage Works* | 2.99% | 5.54% | 2% of the mortgage advance |
Is there an appetite to invest in property?
It’s been a quiet time for buy-to-let in 2021, using the cut to stamp duty resulting in rising house prices as owner-occupiers battled it to secure properties making big tax savings.
With the biggest cuts no longer available, it’s likely the market will begin to decelerate, and this could be good news for property investors.
After a period of stagnation, the rental market is now on the rise again.
The estate agency trade body Propertymark says a record quantity of new prospective tenants registered for houses in May.
Its monthly tracker also discovered that just 0.9% of tenants recorded rent reductions, the cheapest recorded within the month of May since records began.
Landlords should seek advice before investing
The figures above could be an indication that the buy-to-let market is greatly picking up again after a difficult year – however it remains seen the number of landlords will take the leap and invest further.
Eleanor Williams of Moneyfacts says: ‘There could still be some understandable hesitation from prospective landlords, plus some existing investors could even be considering downsizing their portfolio, with respect to the pandemic's impact.
‘As house prices rise, however, interest in rental accommodation is high, and savings rates remain poor. This means purchasing property might be enticing.
‘It is vital that would-be landlords and people looking to change their mortgage deal seek advice to ensure it's the proper time for them plus they get the best package for their circumstances.’
What’s happening to book prices?
New data from the estate agency Hamptons shows the cost of rent grew by 8.5% year-on-year in June.
The average cost of a newly let home in the uk rose to lb1,092, led by big annual increases in the South East (16%) and The west (15%).
Unsurprisingly, London remains the priciest spot to rent a house, with average rents of lb1,751.
Advice on becoming a landlord
If you’re thinking of investing in property, we’re here to assist.
Our guide on becoming a landlord explains all of the key stuff you should consider before choosing to invest.
We also have advice on obtaining a buy-to-let mortgage and whether you should use a letting agent to manage your investment property.
Finally, if you’ve decided to money in your investment, check out our guide on the tax and mortgage implications of selling a buy-to-let property.
