Barclays has become the latest lender to offer buy-to-let landlords an opportunity to take advantage of low interest rates. However, the Bank has moved to offer this incentive for a full decade.
The ten-year buy-to-let let mortgage is fixed at 2.99% and comes with a £2,000 fee. It is not subject to strict rental income requirements due to the length of the loan, which has led to suggestions that some buy-to-let investors could brrow more than could on other shorter-term fixed deals.
For mortgage products with terms up to five years, the lender requires landlords to illustrate their rental income can cover their mortgage payment by a ratio of 145%, should their mortgage rate increase to 5.5%. However, this rule is waived in favour of a more flexible ‘affordability calculator, on products of five years or more.
Jonathan Harris, director of mortgage broker Anderson Harris, said on the new product: ‘A 10-year fix for buy-to-let is unheard of and the result of changing circumstances for the sector. What is exciting about this product is that the affordability calculator takes into account the applicant’s overall income and expenditure position – so massively benefits those applicants with strong incomes and limited commitments.’
Barclays launches new 10 year BTL fix
‘The upshot is that they can borrow more than previously – a welcome innovation to recent restrictive practices in the buy-to-let market,’ he added.
Landlords considering this product should be wary that the product comes with an exit charge of 5%, which could be a gamble should investors be unsure of what their future holds.