Buy-to-let mortgage companies still 'selective' over who they lend to
Posted by Gary Winter
Despite a recent expansion in the availability of buy-to-let mortgage products in the UK, lenders are still more selective over who they approve for loans than they were before the credit crunch, it has been claimed.
As such, those thinking of becoming a landlord will need to be able to demonstrate that they have sufficient finances if they want to borrow money to invest in a buy-to-let property.
In what could be useful buy-to-let advice for first time investors, Lee Grandin, managing director of Landlord Mortgages, explained: "With funding in short supply, inevitably mortgage lenders are very selective on who they lend to and what they lend on.
"Generally, finance is easier to obtain if you can prove your financial worthiness, this means you often need to earn an annual salary of over £25,000."
The expert added that experienced landlords can usually obtain a mortgage of up to 80 per cent loan-to-value (LTV) but that those who are new to buy-to-let should expect a maximum LTV of 75 per cent.
However, the upside to the currently stringent lending criteria is that it is creating a shortage in the supply of available rental properties, meaning those who are able to let out a house or flat can expect higher rents.
"The market has remained very subdued by historic standards and we do not envisage a significant [change] until the end of 2012. This of course will result in a general lack of supply of rental properties and may well push up asking rents," said Mr Grandin.
"[We expect it to remain] very static lending wise, but [see] an increase in asking rents."
It follows recently released figures from the Council of Mortgage lenders which revealed that, in the third quarter of the year, the number of new buy-to-let loans approved by lenders increased by 16 per cent compared to the preceding quarter.
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