Buy-to-letwatch: Lenders have regained their appetite for creativity

This market thrives on thinking outside the box and lenders have regained their appetite for creativity with some fantastic products

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The current buoyancy of the buy-to-let market has brought with it many benefits for the sector. 

The most obvious one, of course, is the increase in business we are all experiencing.

Then there is the attention the sector has attracted on a wider scale. Admittedly, this is a double-edged sword: the sector’s success has led to unwarranted and incorrect speculation that the market is somehow risky, leading to further scrutiny from the regulator. But the attention also has its plus points with more and more people recognising the value of the private rental sector and the worth of landlords.

Meanwhile, and perhaps most importantly, there is the increase in products and, crucially, innovation. As lending figures have risen, so too have the number of products available. The eyes of the lenders have been firmly fixed on this market when it comes to developing new product lines.

As I have said on numerous occasions, this market thrives on innovation and creativity. Where run-of-the-mill, straightforward products may suit the residential mortgage market, the buy-to-let sector requires a little more imagination and thinking outside the box.

This all but disappeared in the days following the credit crunch as lenders began to fear anything that was not plain, simple and prime. However, it is clear they have got back their appetite for creativity and we are seeing some fantastic developments, the most notable at the moment being Precise’s entry to the second charge buy-to-let market.

Just last month, the Alan Cleary-led lender announced it had launched a range of second charge buy-to-let products with rates starting at 5.95 per cent. Aimed at prime landlords wishing to raise capital from the equity in their portfolios, the products are available on an interest-only and capital repayment basis.

Of course, Precise is by no means the first to launch into this space. Nevertheless, it is great to see such a strong name within the sector continuing to think creatively in order to give landlords what they need.

Many landlords have quite attractive mortgage rates but have to give these up when they want to remortgage in order to raise funds to expand their portfolio. 

Taking out a second charge mortgage, secured against an investment property, enables landlords to access the funds they need without having to give up their current deal.

The sector may be facing some hurdles at present but it is clear there is plenty of confidence in buy-to-let and a huge amount of support for it from lenders. Let us hope we see this continue. 

BTL