Steve Bolton, founding partner of buy-to-let consultancy Platinum Portfolio Builder, has warned that apparently easier mortgages for landlords might come with a hefty price tag.
Bolton, whose company advises property investors on the best deals, said that the 85% LTV buy-to-let mortgage newly on offer from Kensington should be met with caution.
He is advising buy-to-let investors to steer clear, for the time being.
He said: “Investors need to be aware that the revert rate of this particular offering is 5% above LIBOR.
“With a bank base rate rise looking imminent, the first investors to come off their fixed rate of 5.99% in two years’ time could find themselves paying a post-fix rate of anything up to and beyond 7%.”
He said that after the fixed period comes to an end in two years’ time, investors might wish to remortgage to another product. However, this option would rely on a greater number of lenders offering competitive 85% LTV products, otherwise investors might have to put in more capital.
Bolton advised: “My recommendation is to wait. This is a potentially good sign, but as demand increases we would hope other lenders will look to cash in on this profitable market.”
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