Categories: limited company | limited company buy to let mortgages | hmo
limited companyThe turn of the month has brought good news for landlords. A number of lenders have cut rates across their standard and specialist buy to let mortgage ranges.
Both high street and specialist lenders have made personal and limited company rate reductions on standard properties and HMOs, while others have followed with large cashback offerings and criteria changes to accommodate more borrowers – even those who may have previously been turned down.
With encouraging signs that the overseas conflict has been less harmful to public finances than feared and swap rates trending down, lender competition is clearly intensifying. As a result, landlords are starting to ask whether now is the right time to act.
We’ve produced this Q&A to help you understand what’s happening in the mortgage market and how you can capitalise on rate reductions, immediate action ahead of renewal could save you money.
What new deals are available?
Several lenders have made encouraging changes to their buy to let mortgage ranges recently, with rate cuts and new product launches across a number of categories.
In the limited company space, one specialist lender has launched a two-year fixed rate deal at 75% loan to value (LTV) priced at 4.09%, matching what is currently the most competitive headline rate available in this part of the market.
Another specialist lender has made cuts across its standard, limited company and HMO ranges. For energy-efficient properties rated EPC A to C, its cheapest two-year fixed deal at 75% LTV is also priced at 4.09%. The same lender has introduced a fee-free option at 5.74%, which may suit landlords who prefer to minimise upfront costs even if the headline rate is higher.
There is also a new cashback incentive available in the market, with one lender offering £1,000 on selected buy to let products — a useful contribution toward the costs of purchasing or remortgaging.
Why have more lenders been cutting rates?
Buy to let pricing isn't driven directly by the Bank of England Base Rate. Instead, it follows swap rates, the wholesale cost lenders pay to fund fixed-rate deals. Swap rates have eased in recent weeks, giving lenders room to reprice.
With several specialist and mainstream lenders all competing for landlord business at once, that has resulted in a wave of rate cuts across buy to let, limited company and HMO products.
Should landlords wait for further rate reductions?
It may be tempting to hold out for the next cut, and further reductions are entirely possible if swap rates keep easing. But there's no guarantee. Pricing can move in either direction within days, and a property that looks marginal on rental coverage today could become a much harder application if rates tick back up before you've secured a deal.
As such, we recommend securing a competitive deal as soon as possible to protect yourself from any potential market shake-ups.
Why locking in now may beat waiting
Most lenders allow landlords to reserve a rate well in advance of completion, often up to six months ahead. That means you don't have to choose between securing a deal and keeping your options open, you can do both. Locking in protects you against any upward move in rates while leaving the door open to better pricing later. Waiting, by contrast, only pays off if rates fall and you act fast enough to catch the new deal before it disappears.
What if rates fall after you've secured a mortgage?
Some landlords may be unaware that securing a rate isn't necessarily the end of the conversation. Many lenders allow borrowers to switch to a lower rate if one becomes available before their mortgage completes, typically at no extra cost. In other words, locking in early can give you the best of both worlds, a safety net against rises, with the flexibility to benefit if rates fall further.
Speak to a specialist advisor
Rate movements are happening quickly and not every lender is repricing at the same pace. Speak to one of our specialist advisors to find out which lenders are currently offering the most competitive rates across buy to let, HMOs, holiday lets, commercial mortgages and development finance.