Landlords expect to buy an average of three properties in the next twelve months – the same number as 2004. This is a significant increase as the average size of investors’ property portfolios is only six properties.
However, the number of remortgages is expected to drop with investors only intend to remortgage two properties in their portfolio – down from four in 2004. This reluctance to remortgage may be as a result of many investors choosing fixed rate mortgages in 2004, which have tied them in for at least two-year periods.
Lee Grandin, Managing Director of Landlord Mortgages comments, “Landlords generally review their mortgages on a regular basis but with so many new deals on the market, we urge investors to make sure that they have the correct type of financing. Many of our landlords have been investing in property since 1999 and if they haven’t done their homework properly they could be losing hundreds of pounds.
“Landlordsare generally astute investors who manage their portfolios skilfully and many are currently taking advantage of the opportunities offered by a rocky housing market. It is therefore important to not only choose the correct properties but to ensure that your financing is suited to your growing portfolio.“
Tips from Landlord Mortgages:
· Review your redemption penalties – It may be cheaper to pay the redemption penalties in order to get out of an uncompetitive deal.
· Look at the tax advantages offered by the various types of mortgages - Mortgage Interest payments can be offset as an expense against rental income for tax purposes so you should consider this.
· Consider interest-only and repayment options– Many investors choose interest-only mortgages believing that capital gains will provide them with a profit at the end of the period. Consumers need to decide if they want to take this chance or stick to a repayment mortgage.
· Look out for special deals – To encourage remortgaging, some lenders are offering fee free deals or cash-back incentives, look out for these deals.
· Speak to a specialist broker – These companies live and breathe buy-to-let mortgages and are better placed to find you a good deal than companies, which offer more general advice.
· Consider moving your portfolio to one lender – Some lenders use portfolio-lending arrangements, which average the rental calculation across all the properties. This means that the higher yielding properties can subsidise the borrowing on the lower yielding ones.
· Read the fine print – Make sure you understand any redemption penalties or deed release fees, which apply to your potential mortgage.