The increasing competition in the UK mortgage industry along with govt schemes to encourage more affordable lending have led to the mortgage loan interest levels falling considerably. Some of the offers available are now the lowest they have been for many decades. The Financing for Lending and Help To Buy govt initiatives were aimed at stimulating loaning to individuals wanting to buy a home and also to small companies. However, a by-product of these projects, particularly Funding for Lending, is that we are seeing clearly more highly competitive ‘buy to let’ mortgage loan offers out there. It seems that banks and building societies are more than happy to give traders low interest rates even when they do not have a large down payment to put down and this has led to an increased supply of excellent value buy to let mortgages.
So traders are enjoying low interest levels without having to tie up too much of their investment. The distinction between interest rates for those with a 25 % down payment compared to those with a 35 % down payment has now cut in half making it considerably cheaper to get a 75 % loan-to-value mortgage loan than two years ago. In early 2012, a trader with a 25 % down payment could expect to pay generally 1 % higher than someone with a 35 % down payment. Now, the average distinction is under 0.5 %. This seems to suggest that lenders are keen for a piece of the buy to let business, a recommendation strengthened by the fact that banks are keeping charges as low as possible for potential residence owners looking for a mortgage loan deal. When a trader considers all the expenses of purchasing an investment residence, such as bank charges, assessment expenses and solicitor’s charges they will be paying less now than 2 years ago.