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Buy-to-let landlords turning to alternate methods of finance

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According to the latest Broker Sentiment Survey from bridging finance company MTF, 84% of brokers said they were unable to source a buy-to-let (BTL) mortgage for some of their clients in Q4 of last year – meaning they had to use alternative sources of funding.

This data comes as The Bank of England cracks down on buy-to-let lending through the introduction of tighter borrowing rules and stricter affordability tests.

The study found that when it came to their BTL clients:

  • 27% of brokers blamed affordability as the main barrier to sourcing a BTL mortgage;
  • Adverse credit (20%), the downvalue of the property (20%) and consumer BTL regulation (20%) were also cited as obstacles;
  • 69% of brokers said they opted for bridging finance after being unable to raise a buy-to-let mortgage for their clients where time was of the essence;
  • 8% of brokers opted for secured loans as an alternative.

Reasons for talking out bridging finance

The three overall reasons for taking out bridging finance during Q4 were cited as:

  • 32% - refurbishment;
  • 31% - development projects;
  • 12% - mortgage delays.

Summarising the results of the research, MTF said: The results from our Q4 survey reflect the adverse impact of stricter affordability and stress testing from mainstream lenders on professional property investors’ ability to obtain buy to let mortgages. Despite uncertainty in the wider markets, we expect strong demand for bridging loans to continue in 2017.

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