Finance for buy-to-let (BTL) investments is in high demand. In 2021, BTL lending reached a massive £44.5 billion, according to Intermediary Mortgage Lenders Association – a rise of 17% on the previous year.
The outlook for the coming 12 months is similarly positive. With most experts predicting house price growth in the region of 3-5%, and rents expected to increase by around 4.5%, it is likely that the buy-to-let market will remain highly competitive. In fact, a recent study suggested that 34% of UK landlords plan to buy at least one property in 2022.
The question, then, is where should buy-to-let investors turn to finance their property purchases?
There are two primary options to choose between: bridging loans, for those seeking a short-term solution before capital becomes available to them from elsewhere (such as the sale of another property); or Buy-To-Let Mortgages.
Choosing the right buy-to-let product
BTL investors will, of course, primarily be focused on selecting the right property – one that will match long-term capital growth with high tenant demand and healthy rental yields. However, if they are to successfully navigate the competitive market and effectively develop a portfolio of rental properties, they will also need to choose the right financial products.
Market Financial Solutions (MFS) can provide both bridging loans and mortgages. With 15 years’ experience as a leading bridging lender, we recently launched a new range of Buy-To-Let Mortgages.
We are offering a super flexible interest cover ratio (ICR) from 120%, which can then be combined with rolled up and deferred monthly payments, deferred interest of up to 1.5%, and top slicing. This will help achieve the right loan size, even on prime London properties, while avoiding failed transactions, delays and lost fees.
With two and three-year terms and a bespoke approach, our loans provide choice and breathing space between bridge exits or initial purchases and future long-term financing.
Speed and flexibility remain key
Whether going down the bridging or mortgage route, there are several qualities to look for in a Buy-To-Let lender:
Speed is one. As noted, the property market is expected to remain highly competitive in 2022 due to significant demand and limited supply, so the ability to act fast will prove a major advantage for a buyer.
Flexibility is another. Brokers and investors will want a lender that is able to tailor products to the borrower’s particular needs and circumstances. Off-the-shelf products leave little room for more complex cases – these typically require a bespoke approach, particularly in the uncertain climate brought about by Covid-19.
Ultimately, with residential properties likely to be in high demand, and potential challenges on the horizon in the form of rising interest rates, it will be more important than ever that buy-to-let investors choose both their lender and products wisely in 2022.
Paresh Raja is the founder and CEO of Market Financial Solutions (MFS) – a London-based bridging loan provider. Prior to establishing MFS in 2006, Paresh worked as a senior professional consultant in one of the top five management consultancy firms, and also set up an independent investment group.