As the buy-to-let mortgage market experience extraordinary volatility, broker Daniel Lee says no one knows how lenders will view landlords who ask for mortgage holidays, once the the crisis is over.
Landlords are being encouraged to keep calm and not make any rash decisions while Coronavirus causes difficulties within the buy-to-let mortgage market on an almost hourly basis.
Daniel Lee, principal of Legacy Financial Consultants, warns landlords to think very carefully before taking a payment holiday, as some are doing this even while they’re still getting rent.
He says: “Right now we have no clear guidelines on how these payment holidays will affect the borrowers in the future – could it affect your ability to borrow from that lender or that group of lenders in the future?”
Mortgage brokers are having to call lenders for updates throughout the day to get the latest information, while some high street lenders have pulled out of the buy-to-let market only to re-enter the following week, says Lee.
“We’ve seen some investment and BTL lenders close their doors to all lending for the time being and some lenders have raised their rates to a point where it doesn’t become attractive for the client – in essence pricing them out of the market, but at the same time some lenders have actually lowered their interest rates.”
He says rates are also changing rapidly too. “We’re seeing product changes such as tracker rates that were available only four or five weeks ago are higher than previously.”
It can be challenging to get a mortgage as some lenders’ criteria are becoming more stringent amid fears about rental returns, while getting a physical valuation carried out is proving tricky.
He adds: “Mortgage lenders are switching to automated valuations which might become more of a feature post the COVID-19 pandemic – we might see this speed up the process of valuations, or it might even make them cheaper.”