Already this year, there have been a number of changes in the mortgage application process, but three areas in particular seem to have the biggest impact. The good news is that all three are a positive step by lenders to ease mortgage criteria and open up options that that could save you money on your mortgage borrowing or associated costs.
Both residential and BTL mortgages have seen shifts in the level of deposit needed. On the residential front we now have over thirty lenders offering mortgages with a deposit as little as 5% and with no real difference in lending criteria to those who have larger deposits. With parental backing it is now possible to obtain a 100% mortgage although lending criteria in this instance is tough to satisfy.
Buy to let mortgages have also improved in this area. Whilst the interest rate and fees are above average there is now one lender is offering buy to let mortgages with only a 15% deposit. Many more are offering mortgages with just a 20% deposit and with rates and fees at a fairly competitive basis.
Clearly bigger deposits give you access to cheaper mortgages, but smaller deposits could be secret to buying that bargain property now or buying sooner and avoiding having to pay a higher price for a property further into the future.
Buy to let Limited Company Mortgages
This is obviously a reaction from the market to the pending changes on the taxation of buy to let properties. Not too long ago there were only two lenders offering buy to let mortgages where the property could be held in a limited company; today that number is ten. This has brought the cost of mortgages for properties held in a limited company down significantly due to the increased competition. Whilst parliament are still debating proposed changes in this area, it is comforting to know that the buy to let market are providing more options for those suited to holding investment property in a limited company.
Traditionally lenders have preferred to offer mortgages where the term expires before the applicant reaching retirement, limiting this to age 65 or perhaps 70 at a push. There are some lenders now prepared to offer mortgage terms up the age 75 and beyond. This measure will undoubtedly benefit many people who find themselves stuck with their current lender or struggling to make the payments affordable due to the current term restrictions.