Changes to buy-to-let mortgages

From 21 March 2016 new rules will regulate buy-to-let mortgages. There will be two types of buy-to-let borrowers - consumer and professional borrowers.

As with normal consumer mortgages, rigorous checks as to affordability, etc. will need to be considered for consumer buy-to-let mortgages.

Buy-to-let mortgages are currently unregulated and this change will regulate buy-to-let mortgages for consumer landlords, bringing them in line with mainstream residential mortgage requirements.

The Mortgage Credit Directive could end the availability of mortgages in a different currencies (i.e, the purchase of a holiday home abroad). If there is a 20% fluctuation in two currencies lenders will need to offer an option to switch the mortgages, which would be extremely costly to the mortgage provider.

A professional landlord is defined as someone who is currently renting out property or has specifically obtained a mortgage for the purpose of running a buy-to-let business. The legislation allows the individual borrower to declare that they are a professional rather than a consumer.

The Mortgage Credit Directive is a piece of European Union legislation that aims to bring together regulation of the property market.The rules have been debated since 2003 and were agreed last year, bringing in tougher application and affordability requirements for borrowers in all member states.”