Given that mortgage rates are set to rise because of the rising interest rates, many buy-to-let investors will be having to pay more on their mortgages as lenders raise their rates to meet the Bank of England’s base rate.
It’s worth noting that although the Bank of England is raising their rates to 5%, mortgage lenders’ rates will be a lot higher than this. Especially with buy-to-let mortgages, rates are often a lot higher than standard residential mortgages due to the higher risk of them not being repaid.
Buy-to-let mortgage repayments cover the accrued interest of the mortgage, so monthly repayments will set to rise.
Because of this, buy-to-let mortgages are expected to become less popular with investors in the immediate future, as many will not want to deal with higher interest rates and would rather invest in property through other means.
If you’re interested in investing in buying to let property, however, don’t let this news deter you. There are alternatives to using a buy to let mortgage when purchasing buy to let property that actually comes with a lot of extra benefits for investors.