What chance do brokers and Landlords have in a mortgage market that is changing constantly; where the products range are diminishing and the banking system is in turmoil? Incidentally, there are no more five year fixed rates available in the buy to let mortgage market at present. The Bank of Scotland is only offering buy to let landlords the choice of tracker rate deals and nothing else.

The next common problem I have seen recently with my buy to let clients is that their property portfolios have devalued and they are in negative equity. This is fine if they could remortgage to a better rate, but for many they cannot and they are now stuck on the standard variable interest rate (SVR) which is the worst interest rate to be on. Negative equity is generally not an issue for most property owners as long as they have no intention of moving and can sit through the slump in the property market.

The Day Buy to lets died a death! Further problems confronting the buy to let landlords today is that Bradford and Bingley (one of the UKs leading buy-to-let lenders in the market place) was privatized by the government a week ago. Great I hear you say until you look at Northern Rock which was privatized a year ago. Landlords and property owners who currently have Northern Rock mortgages are being forced to move their mortgages from the Northern Rock; as they are not offering existing clients any new mortgage deals. If they choose to stay they will end up on the standard variable rate (SVR); which is the worst interest rate the bank can offer its customers. Northern Rock is clearing their mortgage book of all existing mortgage clients as they come to the end of their mortgage deals and only taking on new mortgage clients.

I know of many clients in the above situations. Some of them are just unable to move their current mortgages due to the recent down valuation of their properties and the negative equity they now have. Most of these landlords are now subsidizing their buy to let mortgage portfolios and in some cases they are paying 500 to 2,000 pounds per month depending on the number of properties they own to support their property investments.

There are some landlords that have at least 15% equity in their properties and they are finding lenders that will offer them new remortgage deals. The new mortgage lenders are asking for a 2% arrangement fee for their new mortgage product, even though the mortgage is for a period up to three years. The landlords are able to add this arrangement fee onto the new interest only mortgage deal, thus increasing their mortgage liability and mortgage costs.

There is some good news for landlords Rental Demand is strong, very strong actually! Three of my clients have raised their rents for their properties and have found new tenants and in one of the cases the new tenants paid a years rent up front. What a result! My only advice to anyone with a mortgage of any kind is that you should speak to a qualified mortgage consultant who can provide you with good sound advice for your circumstances and has access to the whole of the mortgage market in order to find you the best deal for you. Remember we are in a fast moving finance market and nothing is as it was yesterday & tomorrow should be better.

Mark Aucamp has extensive knowledge experience in the field of Debt Management and providing Mortgage Advice.

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