On top of this, a third of today’s property investors say they can only just covers their mortgage commitments from the rental income they receive.
With the buoyant housing market of recent years leading 43 per cent of respondents to rely most on property price growth, compared to just 15 per cent who focus most on rental income, Heritable Bank is highlighting the importance of taking all sources of income into account when assessing lending risk in the current Buy to Let market.
Adrian Scott, managing director of residential mortgages at Heritable Bank said: “Three out of four property investors place at least as much importance on the future value of their properties as on generating enough income to cover their mortgage, and we firmly believe there is value in Buy to Let applications being assessed on the basis of overall affordability rather than a simple rental cover equation. This requires expert, flexible underwriting which purely automated underwriting systems simply aren’t capable of delivering.”
In addition, Heritable Bank claims many landlords could boost their overall yield by re-structuring financial arrangements across their entire portfolio.
Scott continued: “The outlook for the property market is mixed, with price growth having slowed in most regions. This is an ideal time for professional mortgage advisers and expert lenders to help investors squeeze latent value out of poorly structured Buy to Let portfolios. Many will have built up piecemeal mortgage arrangements for each new property and not considered how they could restructure their overall portfolio financing far more cost-effectively.”
