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Most landlords will know by now that tougher buy-to-let lending criteria will be coming into force in September, bringing even stricter affordability assessments. But are you acting on it? The National Landlords Association (NLA) is urging landlords to remortgage, before it becomes a whole lot more difficult.
The newest measures follow earlier attempts by the Bank of England's Prudential Regulation Authority (PRA) to cool the buy-to-let (BTL) market. And indeed, it's already having an impact, as 43% of landlords recently surveyed by the NLA stated that the process of obtaining finance has become more difficult since the start of the year.
So, while the average fixed buy-to-let rate may be down from both the start of the year (3.34%) and last August (3.53%), standing at 3.22% this month according to Moneyfacts data, landlords haven't had much to cheer about, as 53% reported to the NLA that they've had to provide additional evidence to support their mortgage applications. This included tax returns, cash flow forecasts and even business plans.
Chris Norris, head of Policy at the NLA, said: "Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance."
Since it's already become harder to obtain a new BTL mortgage deal, you may be asking yourself what remortgaging now could do to reduce the impact of the upcoming and past regulatory changes. Well, for one, the average fixed BTL rate for remortgagors stands at 3.29% today, Moneyfacts data reveals, not much higher than the overall average rate and therefore certainly worth considering.
And of course, there are even better deals to be found in the Best Buys. If you click on Details for any of the deals, you will find that most are available for remortgagors, with rates starting from 1.58% at 60% loan-to-value (offered by Post Office Money).
You wouldn't be the only one remortgaging, either, as statistics from UK Finance show that remortgaging accounted for over two-thirds of total buy-to-let lending in June, as it has done ever since the stamp duty changes on second properties came into effect last year.
"Changes to buy-to-let taxation will eat away at many landlords' profits and make it more challenging for them to manage their businesses," explains Chris. "As a result, many are looking to limit their exposure to the changes, which is why we've seen a rise in remortgaging."
While things may already seem dire, the situation is certainly due to worsen from 30 September. Given that rates are currently lower than they have been, now's the time to act, as Chris says: "While it may not be financially advantageous for everyone, if you're considering remortgaging or expanding your portfolio, do so now to avoid any further difficulties."
Have a look at our Best Buy charts to see what you could save on your monthly repayments by remortgaging.
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