Is your mortgage fixed-rate coming to an end this Spring? You’re not alone. More landlords than usual will see their two-year fixed-rate deals come to an end in March.
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Why are so many fixed-rated ending at once?
Two years ago, there was an upsurge in buy-to-let lending as landlords raced to beat the tax hikes that were being introduced at the beginning of April of that year.
An extra 3 per cent on stamp duty was introduced on April 1, 2016, for anyone buying a buy-to-let property or second home. The policy was introduced as part of measures to cool a then vibrant buy-to-let market that many feared was in danger of overheating.
Property investors rushed to complete their purchases ahead of the deadline to avoid paying the higher tax rate.
How did the higher rate tax impact landlords?
The tax hike meant that on a property worth £300,000, they could save £9,000 (three per cent of the entire price), with investors only paying the regular £5,000 stamp duty.
For those landlords who waited until after the new surcharge was introduced, they would see their bill almost triple to £14,000.
This was the main reason behind the 87 per cent year-on-year increase in housing transactions in March 2016, according to experts. It compares to an 8.1 per cent increase in January and a 16.3 increase in February of the same year. Levels returned to 15.4 per cent in April.
What to do if your mortgage fixed-rate comes to an end in March
For landlords whose initial fixed rate deals are due to come to an end in March, it is worth beginning research into what new deals are available, as it typically takes six to eight weeks to complete a remortgage.
There are a number of deals out there, so keep in mind that they will be available from your current mortgage provider as well as elsewhere.
And it’s important to keep in mind that new lending rules have been introduced since the tax changes, with landlords with more than three mortgaged properties under greater scrutiny when applying for a buy-to-let loan. There are now much stricter lending criteria in place to ensure that these landlords can afford the loans.
Are you looking to mortgage this Spring? Tell us about it in the comments.
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