Landlords put up more equity for buy-to-let loans

Adam Hignett
BUY-TO-LET borrowers are putting up more equity before making new purchases in a bid to shorten mortgage terms, according to a new report by the Mortgage Advice Bureau.

Aspiring landlords have increased the amount of equity behind them by 15 per cent during the past year to an average of almost £100,000, while the average value of properties sought to let has remained static, at just under £230,000.

The increase in equity being offered has been driven by the ongoing increase in property prices, giving landlords more scope to investigate a new purchase or refinance.

The new figures show the average loan to value deal sought by buy-to-let borrowers dropped from 62.2 per cent to 56.5 per cent, allowing them to benefit from lower costs as they represent a more secure prospect.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “A number of mainstream lenders have increased their buy-to-let offer already and new entrants have also arrived to boost competition,

“It means this part of the market is likely to see strong activity this year, both from people who are already involved with BTL and others who are learning the ropes.”

The research revealed buy-to-let borrowers are looking for shorter mortgage terms, with those seeking mortgages of 25 years or more declining by 10 percentage points to 52 per cent over the past year.

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