A large number of people who rent property have had to make significant adjustments to the financial flows in their investment in recent years. Pegasus Insight states that three out of every 5 landlords had their fixed-rate buy-to-let mortgages expire in this period. This implies that there is no security of predictable monthly payments anymore, and many are now faced with increased expenses. According to Nick Statman, this transformation is posing real problems to both the small and big landlords.

Increased Prices post-Fixed Rates End

Landlords on an expired fixed-rate mortgage tend to be put on a higher variable rate unless they can negotiate a new deal. The study obtained a result that over a third (36%) of the landlords whose transactions did not go through had to deal with a higher interest rate, increased fees or a valuation problem. Such increased expenses may have the effect of cannibalising profits if rental revenues are already strained.

A lot of Shop Around New Lenders

Not every landlord remains with their existing mortgage provider. Indeed, 25% of them have changed to another lender once their fixed rate expired. This increased to 37% among landlords who had 11 or more rental houses. This demonstrates that mature landlords running larger portfolios have more of an inclination to compare offers and shift their business to another place. Nicholas Statman indicates that these landlords have the chance of enjoying better rates, decreased charges and fewer restrictions by changing their lenders.

Portfolio Landlords Under Pressure

Nick Statman states that landlords with large portfolios tend to have numerous mortgages reaching maturity within a short space of time. These constitute what she referred to as a refinancing flashpoint. These are close planners, such as landlords. They aim at getting competitive rates, taking into consideration the tax benefits and trying to format their lending to be within their long-term interests. They do not merely want to switch this mortgage with another, but to ensure that their entire financial system is more efficient.

Putting Up vs Going Away

Although there are shoppers, the majority of landlords continue to remain with their existing lender. Among these refinance customers, more than two-thirds retained the lender with which they had refinanced. One in three found a new lender, whereas a third opted to transfer the product, i.e. keep the same provider but change the type of mortgage. It demonstrates that despite the popularity of loyalty, there is a high number of landlords who are willing to consider superior offers.

Conclusion

Some features are of importance to the landlords seeking refinance. The most important is a competitive interest rate selected by eighty-four per cent of the respondents. The following are low upfront fees (63%) and the capability of repaying before the due date without penalties (26%). The majority of the properties (77%) were refinanced in the name of the landlord personally, though 22% were done in a limited company, which can provide tax benefits. These decisions, Nick Statman explains, are an indication of both cost considerations and long-term strategy.