According to figures released by The Council of Mortgage Lenders (CML) in early 2013 buy to let lending accounted for 11.5% of all lending in 2012, up from 9.8% in 2011and totalled £16.8 billion.
A total of 136,000 loans were advanced in 2012 of which nearly half were for remortgage, bringing the total number of loans to 1,445,300.
The average outstanding buy to let loan is £116,238.
In the last quarter of 2012 36,700 buy to let loans were advanced totalling £4.6 billion at an average of £125,340 per loan.
There is now a wide variety of buy-to-let products available.
If you shop around you will find:
- Full status mortgages – very few will now consider self-certificated mortgages
- Mortgages for landlords with adverse credit
- Mortgages with LTV’s calculated against the purchase price
- Variable rate, fixed rate, tracker and discounted rate schemes
- Capital repayment and interest only loans, with and without repayment vehicles for interest only
- Loans from 5 years to 45 years
- Loans for limited companies, with or without a directors guarantee
- Loans for Houses in Multiple Occupation as well as standard residential properties
- Loans on properties occupied by DSS, Students, Company Lets and Housing Associations
However, a typical scheme would probably look like this:
- A maximum 75% LTV, although 80% LTVS have been offered occassionaly recently, and even 85% LTVs – but these are not, yet, at the time of writing, standard.
- A minimum loan of £37,500, meaning a minimum property valuation or purchase price of £50,000, whichever is the lower
- Rent to cover the mortgage (calculated on an interest-only basis) by 125%
- 25 year term
Some schemes limit the number of properties, or the cumulative value of the properties, held by an individual borrower.
For example, Birmingham Midshires limit a borrower to 3 properties with themselves, and the RBS group limit an investor to a total of 9 properties across the group.
According to the latest ARLA survey of buy-to-let landlords:
- 79.3% of landlords borrowed 80% or less of the cost of their investments
- 29% borrowed less than 50%
- 58% borrow between 60% and 90%
- 20.7% borrowed more than 80%
- 3.2% borrowed more than 90%
The overall result is an average LTV of 60% on new borrowing with an average LTV of 46% as a whole across all buy to let loans.