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Interest rates are rising. The November base rate increase of 0.25 per cent is hardly a huge leap, but all the indications are that more increases are on the way.
Even small incremental rises can add substantially to landlords’ long-term costs. It doesn’t take a mastermind to work out that every 0.25 per cent interest rate rise will add £2,500 to the cost of a £100,000 10-year loan.
The increase, then, is a wake-up call to landlords; a reminder that how they finance their businesses can have a major impact on how successful they are in the longer term.
Investing in buy to let is hardly a passive investment, but in recent years finance options have been relatively static – and consequently keeping on top of latest offers has not been top priority for many landlords. Now is the time to pay more attention to that side of things.
Expect a flurry of new mortgage offers.
Harassed landlords may groan at the thought of having to make time to plough through the possibilities. So it is probably good to know there is now an online resource specifically built for landlords that can be dipped into at any time, that can match requirements and circumstances to a comprehensive array of mortgage offers, and which is free to use.
Property-Master.com was launched in May 2017 after two years of intensive development. It has a much longer pedigree, being the brainchild of Angus Stewart who, besides also being chief executive of IT security and compliance specialist e-solutions, was at one time chairman of a freeholder and management company looking after residential property.
The idea is that Property-Master does not offer advice – although there are in-house qualified advisers available if required for more complex cases. Rather it uses computer algorithms to match landlord requirements with lender criteria for app; a sort of specialist ‘Google’ search that lays out the available options.
What makes this special is both the range of search options and the size of the database into which each search is plunged.
Using an initial quick search facility, landlords will see a high level view of the top products available today. To view a more comprehensive and personal set of results, users are taken though to answer a series of questions about their borrowing and the properties on their portfolio. This only takes a few minutes per property.
Another impressive tool is the powerful ‘what if?’ abilities of the website, allowing landlords to play around with a number of configurations and changing their search requirements. “What if you changed the rental, loan amount or term?”
‘Landlords have complete control of their searches and are presented with actual mortgage solutions along with everything they need to compare and make sound decisions, then apply with one click’, explains Property-Master.com marketing manager Helen Turner. ‘They can see if it is worthwhile to re-mortgaging some or all of their portfolio, whether they could or should consider paying off some mortgages and increasing others, whether it would pay to make any number of other changes. And they can do this at any time of day of night, from the convenience of their own home or office’.
Each possible configuration can be tested against over 2,000 current mortgage offers (updated daily) from over 90 lenders. Turner says she would be amazed if any other buy to let mortgage broker would better that.
Multiple applications can be made within a user’s registered account in the same way.
The firm says it is working on an enhancement to its service which will see alerts sent to landlords when new products which match their individual requirements and details are launched.
All this is free to use. Property-Master.com earns its keep from the fees paid to brokers when mortgages are completed. The sums involved are fully disclosed in completion documents.
Any change to existing finance arrangements (and Property-Master.com says most of its applications have been for re-mortgaging) are likely to save the applicant money – otherwise why do it? Property-Master.com says that so far it has saved each landlord using its service an average annual outlay of £1,800.
But perhaps more important to many landlords will be the convenience of the service, the time that it can save them, and, most important of all, the degree of control it affords them over their finances.
Property-Master.com chief executive Angus Stewart believes rising interest rates, tightening lending criteria and the tapering of buy to let interest tax relief will create a new environment for landlords.
‘We expect that the buy to let market will become increasingly professionalised as smaller players facing increased cost and regulation will seek to exit the sector. For those that remain we can expect many to begin re-mortgaging before rates move any higher’.