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Are buy-to-let mortgages getting cheaper?
The initial rates available on buy-to-let mortgages remain at historic lows – but the headline rate doesn’t always tell the whole story.
The table below shows the best deals currently available to buy-to-let landlords with a 40% deposit, based on their initial rate.
| Term |
Lender |
Initial rate |
APRC |
Max loan-to-value |
Portfolio size |
| Two-year fixed-rate |
Post Office |
1.41% |
4.2% |
60% |
Max three properties |
| Three-year fixed-rate |
Virgin Money |
1.69% |
4.4% |
60% |
Max 11 properties (4 with Virgin) |
| Five-year fixed-rate |
Barclays |
2.17% |
4.7% |
60% |
Max 6 properties |
*Mortgage data from Moneyfacts, correct as of 22 September
Beyond this, there are significant variables. The deal from the Post Office seems particularly attractive as it is open to first-time landlords – but there’s a fee of £1,495 to set it up, and you can’t apply if you’ve got more than three properties.
The Virgin deal, meanwhile, comes with an arrangement fee of £1,995, while Barclays asks for £1,950.
With this in mind, it’s best to thoroughly research the best deals available to you and get advice from a specialist broker before taking out a buy-to-let mortgage.
Lending restrictions to be tightened
The uplift in the number of available buy-to-let deals comes ahead of the Bank of England tightening lending regulations for landlords with four or more properties.
From 30 September, portfolio landlords applying for a mortgage will need to provide full financial information for each of their properties, rather than simply disclosing their top-line profits.
These new regulations mark the latest hurdle for landlords, who in recent years have seen their profits slashed by stamp duty changes and mortgage interest tax relief reforms.
What effect will new rules have on mortgage deals?
It remains to be seen how each individual lender will react to the changes, though last week Barclays confirmed it will only make ‘minimal changes’ to its criteria by asking portfolio landlords to fill out a ‘property schedule’ containing the extra information.
In terms of the wider buy-to-let mortgage market, there could be an adaptation period as lender bring in more specialist underwriting processes.
On the other hand, the number of available deals could go up in the short term, if lenders choose to clearly adapt their products to target two different types of landlord – those with four or more properties, who will be affected by the new regulations, and those with three or less.
