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Would-be landlords hit by high-cost loans - The Financial Times

Property investors hoping to take advantage of rock-bottom house prices are finding the cost of new buy-to-let loans prohibitively high.

While the price of residential mortgages has fallen rapidly in recent months, buy-to-let rates have remained expensive, while fees have increased. Some lenders are now charging fees of thousands of pounds for mortgage rates that last only one year and are still at a high premium over the base rate.

At the same time, criteria is extremely tight. Landlords are having to put down at least 25 per cent in cash to qualify for a new mortgage deal.

“Two years ago, lenders were increasingly moving into the booming buy-to-let market as they claimed they couldn’t make a profit in the prime residential market,” says Melanie Bien, director of Savills Private Finance, the broker. “The credit crunch has changed all this. Landlords looking to expand their portfolios by picking up a bargain, or remortgage, are in for a shock.”