Yesterday I read an article in the Weekend FT confirming what we already know - mortgages for Buy to Let landlords have become extremely expensive. Not content with inflicting high interest rates, many of the BTL lenders that remain in the market (very few!) have imposed high arrangment fees, ranging from 2% of the loan amount to 3.5%. To put this into context, the arrangement fee for a mortgage of £200,000 could be as high as £4,000 - and this is before valuation and legal fees come into it! The odd lender who does charge a flat fee imposes a higher interest rate - clients just can't win.
Figures from the Council of Mortgage Lenders (CML) showed that new Buy to Let lending fell for the sixth consecutive quarter in the first six months of 2009. It accounted for 6% of all lending on the first first quarter, compared to 12% last year for the same period.
The high costs make it difficult for landlords to switch to a new mortgage deal and many are having to stay with their existing lender. This may lead to problems when interest rates rise.
Jacqueline Thornton CertPFS
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