According to the Council of Mortgage Lenders, since the emergence of specific buy to let mortgages came about in the second half of the 1990s, the market for them has grown significantly. Mortgage providers have lent something approaching two million buy to let products since that organisation began monitoring the market in a systematic way in 1999.
Over the course of the period since then, the private rented sector has steadily increased in size from where it was, following many years of steady decline. This is largely down to the access landlords now have to a myriad of financial products designed for them allow property purchases to be made with a healthy return on investment often being achievable. However, as the private rented sector has grown over the last 17 years, so has the mortgage market. Some landlords can find the wealth of choice that is now available for them, when seeking finance for their property investments, to be overwhelming. What should you do when trying to pick your way through the seemingly never-ending maze of buy to let mortgages currently available?
Firstly, the role of a mortgage broker can be invaluable to landlords of all types. Whether you are interested in building up a portfolio of student rental accommodation or simply want to generate regular income from a single property, a broker can afford several advantages. Some entrepreneurially minded landlords are put off the idea of a broker who they simply see as a middle man or intermediary, but this is often a short sighted view which does not take into account the full value a broker of mortgages can add to any financial deal. For example, brokers can frequently search the entire mortgage market for you and seek deals that are extremely specific with specialist lenders. If you are looking for a non-standard repayment term, for instance, then a broker can save you plenty of work dealing with each individual lender. This means that you can really drill down into the deals being offered and not take the indicative rates many lenders publicise at face value.
In addition, some brokers are able to access exclusive deals which individual borrowers - even those landlords with multiple properties - cannot obtain. Furthermore, a broker is usually able to use their knowledge of the marketplace to offer advice to landlords with multiple mortgages running on several different properties, even if they are mortgaged with different lenders. Brokers like Richard Fowler CeMAP FPC who is the Operations Director, Independent Mortgage and Protection Consultant at The Mortgage Market UK are often able to help landlords to understand the benefits and disadvantages of different sorts of mortgage - for example repayment, fixed-rate and endowment products - while explaining the risk of each in business terms, something that owner-occupiers seldom require of their mortgage lender. Lastly, a good broker offers a great deal of convenience, meaning you simply have one place to turn when dealing with all of your lending needs.
Of course, getting the right deal with your mortgage or mortgages is one thing, but private landlords also have to consider their other financial affairs when running a portfolio, or even a single property, as a business. Not only are there legal regulations surrounding tenants' deposits to consider, but there are matters like being able to finance repairs and maintenance and other landlords' responsibilities, such as gas safety inspections, which all need to be paid for. With so many business outgoings to consider, a good number of landlords turn to an independent financial adviser for assistance. Many Southampton based independent financial advisers help landlords in the area to look at their business and personal finances in a systematic way. From mortgage deals to business expenditure and from rent yield to tax issues, an independent financial adviser can assist with all of the money matters that some landlords find confusing. For example, where a mortgage deal or a bridging loan has been in place for some time to finance the purchase or upgrade of a property, a financial adviser can often identify ways of lowering expenditure. Re-mortgaging or even paying off mortgages early can be beneficial to many landlords who simply have not taken the time to look closely at their financial affairs recently - something that can be all too easy when debts for multiple financial products are being serviced at the same time.
Whether landlords have been operating in the private rented sector for years using buy to let mortgage products to finance their capital expenditure, or newcomers to the market are simply wanting to find out how much they might be able to borrow for their first rental property, the expert guidance on offer from financial advisers and brokers should not be overlooked. In short, don't simply rely on a quick survey of the high street lenders' APRs to give you an idea of the true state of the professional mortgage market.