The must-see programme of our youth - Top of the Pops has been consigned to the dustbins of our collective memory, as it was apparently no longer 'relevant' to the audience of today.
Some in the mortgage market believe that best-buy tables for buy-to-let products should go the same way – and for a similar reason.
Like pop pickers, investors have ‘moved on’, becoming much more sophisticated. No longer are they only concerned with what the interest rate associated with a particular product may be, other criteria is equally important, for example rental criteria.
But just like the BBC recognises the importance of chart positioning (for some listeners and more importantly the music industry) and continues with a chart run-down show on the radio each week, rates are still the key determinant when it comes to selecting one BTL product over another.
And while it also may be true that headline rates on their own are not necessarily indicative of a good product, I think investors would want to know when a market busting deal is available to them.
The lender’s principle interest with buy-to-let mortgages is in the property on which the mortgage is being taken out, especially the rental return the property is generating, or will generate once it is tenanted. The majority of lenders use a rental calculation to work out the maximum amount a landlord can borrow.
A surveyor will value the property for the lender, both in terms of actual property value and also rental income, to ensure that the lender receives accurate figures. So the prospective investor already knows that lenders will factor in these variables in all cases. All that is left for them to decide is the product and lender which best suits their requirements.
This decision is very often price sensitive – and becoming increasingly so. That’s because although rents are indeed going up, they are failing to keep pace with property prices in some areas of the country. As a result, rental yields are falling.
Taking all this on board, investors that still wish to join the buy to let bandwagon need to ensure they are getting the best deal when it comes to buying properties. And despite the rising costs, the popularity of buy-to-let has continued to grow with lenders starting to extend their total portfolio limits for private investors.
Individual circumstances will determine which is the better option in any specific case, but for many, the simplest and surest way of discovering who is offering the best deals on the market at any particular time is to consult best buy tables and ultimately take expert advice from a broker.
Sally Laker is managing director of Mortgage Intelligence.
The views expressed are those of the author and not those of the company she represents.IFAonline
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From 6 April 2019