Buy to Let Mortgages in 2011

Buy to Let Mortgages in 2011

by Rebecca Hall on 23 Feb, 2011

Buy to let mortgages have suffered just as much from the collapse in confidence in the property market as residential mortgages. Although demand for rented property is skyrocketing in the face of home foreclosures, it has never been so difficult for landlords to obtain finance for buy to let properties.

This represents a clear problem, as landlords struggle to meet demand for housing. This is also a great tragedy as house prices are lower than they have been for years, and yet, mortgages are more expensive than ever.

The upshot is that now is an excellent time to invest via buy to let, however, you can also do so if you have the requisite capital. At the moment, very few mortgage providers are offering the 80-85% mortgages that typified the pre-credit crunch property market, meaning it takes relatively vast sums of capital to buy into the market – sums which most people just do not have.

Similarly, as confidence in the market remains depleted, mortgage charges are comparatively high although interest rates are historically low.

We are at a point in the property market where prices can only go up, making now an excellent time to invest. The market is beginning to thaw, and 85% finance is beginning to appear again, meaning the savvy investor with lower capital than that required for a 65% or so mortgage can now jump in at the perfect time.

The first signs of life are beginning to show in the buy to let mortgage market, which is not only good for landlords, but good for housing supply. Anyone who has the capital would be advised to shop around now before prices start picking up – it could be the best investment they ever made.

That being said, there are some commentators who remain pessimistic about the buy to let market in 2011, and don’t see it picking up for at least another year. They may be right, and the providers offering higher levels of finance may prove to be anomalies in an otherwise stagnant year. Either way, if you can obtain a competitive enough rate, or have the capital for a higher deposit purchase, a stagnant property market still provides a good investment opportunity for those that can.

About the Author

Rebecca Hall


Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.