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Buy to let mortgage lenders could adjust criteria
Tue, 17 Oct 2006
UK interest rates may well rise again during November, leading to further changes within the mortgage market . According to Mortgages for Business, one of the biggest independent mortgage brokers in the UK who specialise in the buy to let sector, investors in property could be given substantial breaks.

The breaks could come in the form of new buy to let mortgage products with the option of new ratios determining how much of interest could be covered by rent . The industry standard is that rent must cover 125 per cent of interest only mortgage payments . The new products would mean that rent would only need to cover 100 per cent of interest only mortgage payments.

According to Mortgages for Business, this will give property investors vital breathing space in the face of further interest rate increases. The new products will also allow lenders to provide loans set at 90 per loan to value, with the rent less crucial to covering interest repayments.

The head of marketing at the broker, Jonathon Moore, claimed: "The signs of a shift in lender intentions are clear and others are likely to follow this lead. Also the August rise in interest rates to 4.75% and the anticipated rise in November is also likely to draw investors to thinking towards fixed rates and there are low fixed rates for buy to let mortgages. However investors should be aware of the larger arrangement fees these products attract, but it is worth considering your ability to offset the cost over the life of the mortgage."

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