Credit crunch hitting buy to let landlords

The credit crunch is hitting buy to let landlords as the number of buy to let mortgages are down and on those available the interest rates have not fallen as much as mainstream mortgage rates.

Moneysupermarket.com has found that the number of buy to let mortgages available has fallen 95% in just 2 years.

Those that are available generally want at least a 25% deposit, not easy, particularly for new buy to let landlords.

Banks are also increasing the minimum rent they require landlords to charge; an issue as generally rents are coming down.

Not only this, the buy to let interest rates have not fallen in line with the reduction in the Bank of England base rate.

The interest rates have only an average fallen by 1.51%, compared to a 2.6% reduction on mainstream mortgages.

Head of mortgages at moneysupermarket.com, Louise Cuming, added ‘Even if you are lucky enough to have a sufficient deposit and have found a suitable buy to let mortgage, you must watch out for the fees levied on arranging the deal, as these can be extortionate.’

The buy to let market certainly is a changed market but there are still opportunities to be had over the long term – if you can get the right property and location and couple this with the best mortgage to meet your needs.

Another point to be aware of, with growing unemployment it could mean tenants face financial difficulty and are unable to keep up with repayments.

So don’t forget to consider getting landlords insurance and rent guarantee insurance.

Check out are article on choosing the right landlords insurance, it might help you understand more about the cover you need as a landlord.