The challenges of the current BTL market can place landlords and brokers under immense pressure. Our ongoing inflation issues can lead to long-term ramifications for borrowers.
Say a landlord loses their existing tenants as they move to a more affordable part of the UK. Months may go by without the owner securing replacement tenants. As a result, they’re likely to fall behind on their mortgage, which could impact their credit score, and put them at risk of repossession.
In an effort to prevent this, they may have taken out finance to refurbish the home, and make it more appealing to tenants who would be able to cover the higher rents. The same funding could have also been used to cover the mortgage payments over the short-term.
Now though, they needed a longer-term exit plan. This is where our BTL mortgage product could help.
Creating breathing space
We could utilise our BTL terms of up to 10 years to provide breathing space for the borrower. The opening years of the loan could be fixed, which would offer short-term stability, and allow them to focus on securing tenants. Moreover, we could roll interest to ease their immediate cash flow issues.
With this added time and capacity, the borrower would be able to improve their financial position, and allow them to hopefully secure better options for their exit strategy. We’d likely work with the broker involved to put a contingency in place that if the borrower still couldn’t secure tenants within a certain timeframe, they’d need to put the property on the market for sale.
With an improved financial position, alongside a (hopefully) increased value following the refurbishment, the borrower should have few issues in progressing.
Further reading:
- Featured Product: Buy-to-Let Mortgage
- Explainer Video: Buy-to-Let Mortgages
- Tool: Buy-to-Let Calculator
- Guide: Guide to Buy-to-Let Mortgages
- Blog: 17 Questions buy-to-let landlords should ask themselves in the current market
- Blog: A simple guide to credit scores
