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Despite mortgage rates softening, many landlords coming off historically low interest rate pricing face a sharp rise in their monthly mortgage payments. How can you navigate higher mortgage costs and maximise your portfolio? 

The last eighteen months have been challenging, to say the least, for landlords and property investors. As we find ourselves in a ‘new normal’, with rates continuing down from last year’s eye-watering peaks, landlords have plenty of new opportunities to explore and boost portfolios.

However, you may be one of the many property investors approaching the end of a historical fixed rate deal, looking for ways to keep down increases to your monthly mortgage payments.

New research from BTL lender Foundation Home Loans reveals how landlords have mitigated rising costs over the last eighteen months and their next property investment plans for this year. For all landlords, the results give an insight into the expected trends and some savings ideas for your portfolio.


Facing the challenge

The research, carried out on 774 landlords across March and April this year, allowed landlords to choose multiple responses when faced with the question: “What changes have you made over the past 18 months to mitigate rising costs?”. The results were:

  • 30% renegotiated their mortgage with their existing lender
  • 29% increased rents
  • 25% cancelled plans to purchase additional property
  • 22% remortgaged to a new lender
  • 17% carry out more of the property management themselves to cut running costs
  • 15% used non-rental income (like savings) to help cover monthly mortgage payments
  • 15% sold property
  • 8% switched from letting agents to self-management

The report also asked landlords how they intend to fund future purchases into their property portfolios. Again, multiple answers were allowed, with 48% reporting they would use a buy to let mortgage, 38% would purchase outright, 38% would release equity from existing properties, and just 15% looking to use funds from a pension pot.

Grant Hendry, the Director of Sales at Foundation Home Loans, commented, “While we have seen rates come down off their 2023 highs, there will still be large numbers of landlords who are coming to the end of their current deals and are looking for solutions in order to keep down any mortgage-cost increases.

“It clearly remains challenging times for landlords, but they are maintaining the profitability of their portfolios, yields continue to rise, plus there remains strong tenant demand against a backdrop of relatively low supply and higher population numbers seeking housing.”


How we can help

Landlords are actively looking at their existing properties to find ways to cut down costs. Notably, the research found that most (68%) of landlords used a mortgage broker to arrange their last buy to let mortgage. This increased to 72% for those with more than four BTL mortgages.

However, as Grant Hendry comments, “a significant minority are still opting to go direct to their lender, rather than review what is available across the entire market. Plus, a number feel they are getting ‘advice’ in doing this, which may support their understanding of the rate type but does not open them to what’s available from other lenders.”

While going direct to your existing lender may appear to be the easiest option, it doesn’t offer you independent advice or guarantee you the most cost-effective mortgage deal available on the market.

The best way to ensure your property finances are as cost-effective as possible is to have one of our brokers complete a portfolio review for you.

By telling us about your portfolio, our expert brokers can review your current mortgages, look at ways you could save, and advise you on new property investment opportunities. There are many other benefits of having a broker complete a portfolio review for you, which you can read here.

If you’re approaching the end of your fixed-rate mortgage term, get in touch with our team of experts to see what types of rates you can access. We can search the whole market to find the best rate to suit your needs, and you can secure a rate up to six months in advance, giving you financial security. Many, although not all, lenders will let you switch to a cheaper deal if one becomes available before you complete, so if rates do come down, you don’t miss out.

To discuss your mortgage options, call us on 0345 345 6788 or submit an enquiry here.


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