Coronavirus: Can I still get a buy to let mortgage?

Several lenders have withdrawn from the buy to let market since the coronavirus pandemic began, but there are still plenty of options available for those wanting to purchase or remortgage investment properties.

HSBC said it cannot accept buy to let mortgage applications at the moment due to physical valuations being suspended until further notice, whilst Vida Home Loans, Furness Building Society and Together Money have also stopped offering buy to let products temporarily.

However, other lenders which withdrew their buy to let mortgages when the lockdown period began, including Kent Reliance, Santander, Clydesdale, and Precise Mortgages, have now started offering these products again.

According to research by Mortgages for Business, more than 85% of buy to let mortgage lenders are continuing to offer mortgages to landlords, which means buyers have over 40 lenders to choose from.

Growing use of automated valuations

Many lenders have turned to automated valuations so that they can continue to offer buy to let mortgages, removing the need for a surveyor to physically visit the property.

However, automated valuations are only usually an option where loan to values are lower, and borrowers are looking for mortgages from 60% up to 75% of the property value. Where homebuyers or those looking to remortgage are hoping to borrow more than this, applications can still be processed but a physical valuation will need to take place once lockdown restrictions are eased.

Where a buy to let property is not of standard construction, is a house of multiple occupation (HMO), or another type of more complex property, even if the buyer has a substantial deposit, a physical valuation will still be needed.

Some BTL rates are rising

Despite the Bank of England cutting the base rate to just 0.1% in March, some buy to let mortgage rates have started to tick up in recent weeks, so landlords who have already found a property to buy or who are considering remortgaging may want to act sooner rather than later.

According to research by financial website Moneyfacts.co.uk, the average rate on a 60% loan to value (LTV) two year fixed rate buy to let mortgage increased from 1.92% in January to 2.39% by the end of April, whilst the average rate on a 60% LTV five year fixed rate buy to let mortgage has gone up from 2.32% to 2.76% over the same period.

However, landlords with smaller deposits to put down have seen the cost of fixed rates fall slightly since the start of the year, with the average two year fixed rate buy to let deal based on a 70% LTV decreasing from 2.89% in January to 2.78% at the end of April.

Moneyfacts said that one reason why rates have fallen on 70% LTV deals may be because the number of products available for those borrowing larger sums has fallen since lockdown measures were introduced, which has led to an overall drop in average rates. In contrast, the number of buy to let mortgages at 60% LTV has risen, increasing with 129 two year buy to let deals at 60% available in April, compared to 124 in March.

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