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85% buy-to-let mortgages are back!

Kensington Mortgages is offering the first buy-to-let mortgage for landlords who only have a 15% deposit in more than two years. 

It comes as part of a range of new Kensington buy-to-let mortgages - a sign that the buy-to-let market might be picking up momentum after a dreadful run. Kensington says the new 85% loan-to-value deal caters for all types of customers, from first-time landlords right through to experienced property investors. 

It also offers borrowers a choice of how they would like to pay the product fee, as either a flat rate or a percentage. Many lenders curbed buy-to-let lending in 2008 as the recession kicked in, with problems obtaining funding on wholesale markets. 

Last September, buy-to-let specialist Paragon returned to the market.Two new lenders, Aldermore and Precise, also launched buy-to-let products through mortgage brokers in 2010. 

The Kensington 85% loan-to-value LTV mortgage has rental cover of 120% and fixed rates from 5.24%. 

Other options include an 85% LTV mortgage with a two-year fixed rate at 5.99% and a 2.50% fee. At 80% LTV, customers can choose between a two-year fixed rate at 5.69% with a 2.50% fee, or go for a 5.99% rate with a flat fee of £1,499. 

Elsewhere, the best LTV rate is 80%, offered by The Mortgage Works, which is part of Nationwide Building Society. Mortgage brokers say the Kensington deal is the first mortgage at 85% LTV that has been offered since the credit crunch. 

Kensington has also reduced its rental cover requirement – which is the proportion by which rent must exceed mortgage costs – from 125% to 120%. 

Charles Morley, head of sales and product development at Kensington, says: 'Increasing demand for private rental property is one of the few areas that commentators agree on at the moment and consensus is that there remains significant opportunity for investors in buy-to-let. 

'The problem for landlords is that, up until now, there have been few products that have really played to those areas of the market where there is demand.

'But with our new buy to let range, Kensington have targeted those areas of demand - providing landlords with the ability to borrow at keener rates.' 

Ben Thompson, managing director at Legal & General Mortgage Club, says: 'Kensington have delivered a really eye-catching set of products with this new buy to let range, which is good news for landlords and good news for mortgage intermediaries. If lenders continue to show this type of product innovation, 2011 could be a more positive experience for the mortgage market.'




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