Rising mortgage costs – what do buy-to-let landlords need to know?
Mortgage costs for buy-to-let landlords are rising due to the response to the mini-Budget, a fluctuating pound, and the cost of living crisis.
So what does this mean for Landords and how can you stay on top of rising rates?
How are buy-to-let landlords affected by rising mortgage rates?
The Bank of England’s base interest rate was at a record low of 0.1 per cent between March 2020 and December 2021.
Since then, it’s increased reach 4.0 per cent last week .
Rates may rise further in the coming months due to a combination of inflation and the negative reaction of financial markets to the mini-Budget.
The Bank of England said that the number of people struggling to pay mortgages would rise sharply in 2023.
As lenders respond to the Bank of England’s rate rises, here’s how both new and existing landlords could be affected:
landlords buying properties will have to factor in higher the cost of higher mortgage repayments, which means they may have to consider cheaper properties
investors looking for a new mortgage deal could be hit with a much higher interest rate when their existing deal runs out
those who move onto a standard variable rate at the end of a fixed deal are likely to see their mortgage costs rise significantly
How can landlords get the best deal?
Many landlords who are considering buying a new property or have a fixed-rate mortgage that's due to expire in the coming months will be concerned about the rising cost of buy-to-let finance.
Although market conditions are likely to remain uncertain for the foreseeable future, there are steps you can take to minimise the impact of rising mortgage costs.
- Stay ahead of the curve – monitor the market frequently and make sure you start thinking about your next mortgage deal months in advance. Most lenders allow you to negotiate a new rate six months before the end of your existing deal.
- Weigh up all the costs – although you may have to pay more upfront, it could be beneficial in the long run to leave your current deal early, pay the early repayment charges, and get a new fix at a lower rate.
- Get the best advice – a professional broker can help you to assess your options and make sure you get the best fixed deal for your needs.
What to do next
- Have you reviewed the mortgages on your property portfolio? - Many landlords do not and its costing them £££ every month.
- With the drastic changes in interest rates it even more important you do this regularly.
- You can request a free consultation with one of our independant mortgage brokers HERE if you would like to understand more about what options are availble to you in a friendly no obligation way and to give you peace of mind your rental properties are working as effeciently as possible for you.
If you are at the stage where you feel selling is your best or only option we can provide you with the support and assitance you need to get the best price currently out there for you. Just reach out to our Sales Director, James Burgess HERE or email directly james@elliotlee.co.uk for a free consultation either remotely or in person.