The broker; Springtide Capital, has recently noted a growing demand from investors for mortgage finance with a high loan to value. However, the majority of lenders require a rental income of 125% of the interest payment on mortgages at 75pc loan to value and above; which is unattainable for the majority of investors.
According to experts at Springtide Capital, the main challenge for buy to let investors is that whilst house prices have risen, rental incomes have remained static, which is why it is increasingly difficult to get access to the right level of finance.
There are only a few small lenders remaining in the market who require a lower rental income of 100% of the interest payment for high loan to value mortgages. Lenders such as Saffron Building Society, Clydesdale and Kent Reliance all offer access to this level of finance, which allows a small handful of investors to gain access to these products. However, according to Springtide Capital, Birmingham Midshires’ recent withdrawal from buy to let lending at this level has left a considerable gap in the market.
Henry Knight, Managing Director of Springtide Capital says:
‘London’s buy to let investors usually opt for mortgage products with a high loan to value because of the associated tax benefits. In order to keep apace of this growing demand, we would like to see more lenders follow the example of banks and building societies like Clydesdale and Kent Reliance who base their criteria on the interest pay rate as opposed to the lenders notional rate, which may vary from lender to lender.’