There has been a ‘big stir’ recently within the industry after mortgage lenders have increased the interest rates on tracker mortgages, thanks to hidden clauses in their terms and conditions. These changes have severely angered ‘Buy-to-Let’ landlords who are now seeking legal advice to see whether or not the lenders can implement such changes. These proposed changes will have a major effect and may result in landlords having to increase their rent they charge their tenants.
Do You Have a Buy-to-Let Mortgage?
These cruel tactics applied by the mortgage lenders are similar to the ones they used before the credit crunch started back in 2008, which had serious consequences to the housing market. What worked well several years ago was that Buy-to-Let landlords and individual home owners started their mortgage on a higher interest rate knowing that their mortgage would fall back to a much lower rate of interest. Once the crash took place, money was frozen and it appeared that mortgage lenders refused to lend any money and mortgage applications were being refused. However, once confidence started to grow and credit requirements eased slightly the thoughts within the industry was that interest rates wouldn’t be artificially suppressed, this put some mortgage lenders in a difficult position as some were paying more for funds than they were receiving for some trackers mortgages.
There have been some cases recently where Banks and Building Societies have informed their customers on tracker mortgages that they will be increasing their rates which would mean they would be paying more for their mortgage, a move which has certainly ‘rattled’ their clients which ultimately resulted in several complaints.
Mortgage Lenders Targeting Landlords With Multiple Properties
Some mortgage lenders are now targeting landlords with three or more properties. They are viewing these types of customers as non-consumer; therefore they will have some protection with Financial Ombudsman and organisations setup offering mortgage protection. More worrying for Buy-to-Let landlords, with larger property portfolios, is that the Financial Conduct Authority are not getting involved as they are not mortgages for the consumer. This has changed the thinking of mortgage lenders who are now treating Buy-to-Let landlords with multiple buy-to-let mortgages different to consumer clients.
Buy-to-Let Mortgage Concerns For Landlords
Landlords with multi properties and buy-to-let mortgages are now considering their next move and what to do but the big concern is that mortgage lenders are contemplating increasing interest rates on their tracker products which may result in landlords seeking legal action.
At AFP Partnership, our advice to all landlords when applying for a buy-to-let mortgage is to be careful, read the terms and conditions, check the clauses and don’t forget to read the small print. We helped several landlords find suitable mortgage lenders and before they agree to a Buy-to-Let mortgage we sit down with them to explain the terms and conditions associated with their mortgage so they fully understand what they are legally bound to and getting themselves into before they sign anything. Customer care is so important to us and we have a reputation to protect.
If you currently have an existing Buy-to-Let mortgage and starting to get concerns please contact us by email or telephone 01743 364377 for help or advice.