Many Buy to Let investors who have traditionally geared their investments heavily, sometimes at the 80% + LTV level, have been left have been out in the cold by lenders until now. Today 10th may 2010 has seen the return to market of Mortgages for Investors in The Buy to Let arena, at the 80% LTV level.
Many Buy to Let Landlords enter the market on fixed deals as this is a way of securing repayments from 2-10 years. After this period investors revert to the Lender’s Standard Variable Rate (SVR). The disadvantage of a SVR is that it need bare no relation to the Bank’s Base Rate (BBR); effectively you are at the mercy of Lender’s internal decision making.
While interest rates are low SVR‘s have remained relatively stable however adhoc interest rate rises are not uncommon. The latest lender to increase its SVR was Marsden Building Society, which increased its SVR by 0.46% to 5.95% on January 1st this year. According to Moneyfacts, 8 Lenders have increased their SVR while the Bank Base Rate remained at 0.5%.
A prudent Investor would try to fix their rates again as it buys security going forward. The downside of re-mortgaging is that it costs a plenty, costs which should happily and logically be viewed as the risk premium for security.
Post election warning bells are sounding, a hung parliament could be the literal hanging of many investors if they don’t build the security factor into their investment model.
For many Buy to Let Investors the 80% LTV level may not go far enough however, it’s arguably the best news some may get this year.