Landlords are finding it much easier to borrow money to buy rental properties, even if they have a low income.
According to claims made by some brokers, landlords with as little as £2,000 annual income are being given mortgages, as lenders are eager to gain business in the buy-to-let market. According to one broker, it is possible for a borrower to obtain a mortgage for a £1m property as long as it’s a buy-to-let and they have another property. The broker added:
“Your income could just be £3,000 a year in rent but they would lend you £500,000 on a buy-to-let mortgage. If you can pay the deposit, you could buy a £1 million property on that income.”
During the first half of this year, lending to buy-to-let borrowers increased by £15,000 a year to reach £150,000. This amount is the highest in 10 years and is almost 10% higher than it was before the recession. In September, the number of loan approvals rose to 24,100, an increase of over a third. The Council of Mortgage Lenders stated that lenders have given out more this year to buy-to-let borrowers, with the figure rising to £3.7 billion from the previous level of £2.5 billion.
The Financial Conduct Authority has hinted that the market’s rapid growth may need to be controlled by regulators. The relaxed attitude displayed by lenders towards buy-to-let borrowers may be due to the increased competition in the market.
Buying a property is complex for residents and landlords, which is why borrowers often turn to a mortgage adviser for assistance. The CeMAP training is a crucial part of becoming an adviser.