Buy-to-let investors may find that they have to pay almost £7,000 more towards their mortgage payments, as the regulations have been changed so that lenders encourage longer term fixed rate deals.

New regulations to be introduced in 2017 will force landlords to take out loans which are at fixed rates for a longer term. Landlords generally apply for two-year fixed rate deals, as they are cheap. However, regulators have expressed concern that landlords won’t be able to absorb the extra costs if interest rates increase.

As a result, lenders are being forced to introduce much harsher affordability checks on investors who want a short-term loan. According to experts, this will make it difficult for landlords to obtain a cheaper fixed rate deal for any term less than five years.

As the interest rates on a longer-term loan will often be higher than the two-year fixed rate deals, landlords may find themselves paying thousands more over the term. However, as they aren’t having to pay fees associated with the regular re-mortgaging associated with short term loans, they could save some money.

According to Moneyfacts, a financial data company, there are far more five-year fixed rate deals on the market than previously, with 421 currently on the market. Around one third of landlords are applying for five-year deals, in comparison to just 20% one year ago.

Mortgage advisers are CeMAP qualified and have all the relevant knowledge to help borrowers find the most suitable deal for their circumstances.

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