Friday, May 20, 2022

Huge difference between BTL and residential affordability

Mortgage Broker Tools

The average maximum loan available to residential customers in February was £235,475, whereas the average minimum loan was £136,000, finds technology firm Mortgage Broker Tools

Mortgage Broker Tools has reported that the spread between the average maximum and minimum loan available to buy-to-let (BTL) mortgage applicants is more than double the spread in the residential market.

The technology firm found that the average maximum loan available to residential customers in February was £235,475, whereas the average minimum loan was £136,000, representing a spread of £99,475.

For BTL customers, the average maximum loan was £346,153, while the average minimum loan was £131,687. This equates to an affordability spread of £214,466, which is more than double that in the residential market.

Analysis of cases processed through the MBT Affordability platform has found that, while the residential market is subject to frequent changes in the affordability landscape, buy-to-let affordability has remained relatively stable. However, the large spread between the average maximum and minimum available loans put greater emphasis on choosing the right lender to match a client’s loan requirements, the firm said.

Tanya Toumadj, CEO at Mortgage Broker Tools, said: This data from MBT Affordability shows that the choice of lender for a buy-to-let client can make a huge difference to the size of loan they are able to access.

Many investors are keen to maximise their leverage to make greater use of their capital, so it’s important that brokers are able to easily identify those lenders that can provide larger loan sizes for buy-to-let clients. Choosing the wrong lender could limit a landlord’s options and have a significant impact on the success of their investment strategy, Toumadj said.

She said: So, carrying out thorough affordability research is just as important in the buy-to-let market as it is for residential clients – if not more so. The affordability landscape may be more stable in this part of the market, with fewer tweaks and changes to calculations, but the consequences of not choosing the right lender are more significant.


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